Wales needs an international face

Geraint Talfan Davies looks at the issues that arise from a depressing set of figures on inward investment

This week’s announcement of the latest figures for inward investment to the UK – which showed Wales taking a mere 2.6 per cent of the projects and 3.7 per cent of the jobs secured or safeguarded – is a sobering event. In the heyday of inward investment, in the late 1980s and early 1990s, Wales would regularly take more than 20 per cent. This precipitous decline is the main reason that the issue of Wales’s international presence is at the top of the in-tray for Edwina Hart, the new Welsh Minister for Business, Enterprise, Technology and Science.

There is little doubt that Wales has suffered from the rash withdrawal of the WDA brand from the international marketplace in 2004 – whatever the case for absorbing its economic policy functions into the civil service – and from the abandonment of its rather ineffective successor, International Business Wales, as part of Ieuan Wyn Jones’s rejig of priorities in his Economic Renewal Programme in 2010.

But the resulting gap coincides with new opportunities. These include a new emphasis on re-balancing the British economy in favour of manufacturing, and the window of opportunity presented to Wales by the UK Government’s abolition of England’s regional development agencies. Together they cry out for an imaginative new initiative.

There has been justified criticism in the past of our over-reliance on inward investment at the expense of the development of our indigenous business. But this should never have been an either/or proposition. We need both. In 2010-11, 1,434 inward investment projects came to the UK: all of them in sectors in which the Welsh economy does have or should have a keen interest.

UK Inward Investment 2010-11:

Projects by sector

Software 229
Advanced Engineering 177
Life Sciences 139
Environmental Technology 111
ICT 101
Finance 99
Business Services 96
Creative and Media 69
Other* 413
Total 1,434

*includes food and drink, power and chemicals

An indication of the opportunities yet to be seized was evident in last month’s three-day visit to the UK by the Chinese Premier, Wen Jiabao, during which trade deals of £1.4 billion were announced. He went to Birmingham to announce that a new MG car would be built at the Longbridge plant. Other announcements included a planned research and development centre at Nottingham University and a tie-up between University College London and a Chinese bio-energy group.

But commentators noted the fact that he went on to Germany where deals amounting to more than £10 billion were announced – a sign of Germany’s manufacturing strength and Britain’s comparative weakness. If British industry as a whole has ground to make up, how much more true is this of Wales?

Much of the British end of the Premier’s tour was connected with the Chinese-British Business Council, which supports the overall UKTI strategy towards China, and which itself signed a deal during the visit that will see the setting up of a new China-UK Creative Office to promote UK design. The CBBC – not to be confused with the BBC’s children’s channel – is a pretty active organisation, but a glance at its members’ mailing for May, creates a disturbing impression that Wales is not fully on board.

In May the CBBC arranged five events in London and no less than three in Scotland – in Fife, Edinburgh and Glasgow – and a visit for business interests in Yorkshire and Humberside to China itself. Another China briefing event was arranged in Birmingham for rail industry representatives. A wider visit to China for West Midlands companies was scheduled for July.

Some will ascribe Wales’s absence from this schedule of events as a reflection of the fact that there are fewer than ten Welsh members of the CBBC – and one of those is the Welsh Government. Certainly, it brings Wales’ current lack of international presence into sharp focus. It is an issue that is being discussed not only in Cardiff Bay and Cathays Park, but also by the  Welsh Affairs Committee at Westminster in its current inquiry into inward investment.

This being Wales, much of the evidence to the Committee has been historical, harking back to the glory days of the Welsh Development Agency, absorbed into the Welsh Government civil service during the bonfire of the quangos in 2004. But thankfully, rose-tinted spectacles have not been much in evidence. Although witnesses – notably the last WDA Chairman, Sir Roger Jones – exhibited some anguish at the abandonment of the 30-year-old WDA brand, many were highly critical of the WDA in its last years. Some were even sceptical of that brand value, recognising that even the most familiar of logos cannot compensate for under-performance on the ground.

It is tempting to say that all that is history. Yet the merged civil service entity, under both Labour and Plaid ministers, has failed to produce the policy cutting edge, speed and commercialism that our situation desperately requires. In education, the Minister, Leighton Andrews, has been bold enough to say that his own department was not fit for purpose. Edwina Hart, the new Minister for Business, Enterprise, Technology and Science must be tempted to say the same thing. She will have an opportunity to recast it under a new head when the current appointment process is complete.

In evidence to the Welsh Affairs Committee, Glen Massey, who prepared a critical report for the Welsh Government on the performance of International Business Wales, complained that Wales had relied for too long on a strategy that was dependent manly on regional selective assistance grants. He added:

“We have to recognise that we are no longer in that game. The problem Wales had was that the toolset it developed to attract that type of investment did not change to reflect the new world economy. The foreign direct investment that is coming into the UK now is not really looking for regional selective assistance; that is inappropriate. As a consequence of that, we should have developed a suite of other instruments – whether it be skills, a property proposition or R&D through universities, a whole raft of things – to make things attractive to inward investment companies. We have not done so. I think there is a recognition in Wales that something needs to be done, and I still think it is in the process of trying to figure out what it is. Sadly, that has been going on for a long time.”

The challenge must be to establish machinery that is sharper in its intelligence gathering, clever and forceful in its projection of Wales and its businesses, light and swift on its feet, and able to connect with potential investors at the highest level. Those last two criteria are the most difficult ones to meet within the process-driven culture of the civil service.

The regular refrain from some quarters, calling for the revival of the WDA, is unlikely to cut much ice. Plenty of people have told the inquiry that in its latter years the WDA was well past its peak, and that its record on inward investment – once the envy of every other economic region in Britain – had already been slipping. But if that is not the chosen route, some other way must be found of harnessing people with the panache and flair that the WDA exhibited in its earlier, best days.

The solution will not only be about creating the right apparatus to represent Wales, but also about using existing UK networks effectively. Lord Rowe-Beddoe, another former WDA chair, and far and away the sharpest marketeer to have operated on Wales’s behalf, has always maintained that in selling Wales to potential inward investors one had always to sell the UK first. It was only when that point was reached that the WDA machinery could be used as the differentiator.

But there is wider point, too. There is a need to develop a more clearly articulated international policy for the Welsh Government, that should be soundly based on an audit of all of Wales’s international connections – political industrial, educational, and cultural. It should embrace all departments of government and, importantly, make use of all those other actors in Welsh society that reach out beyond Wales. It needs to be a collective enterprise.

Geraint Talfan Davies is Chair of the IWA

5 thoughts on “Wales needs an international face

  1. In this respect, the bid for the .cymru Top Level Domain would also be an excellent way of bringing together many of these components under one confident and powerful banner.

    It give a positive message to the Welsh and world-wide public that we have a culture, products and services which we are proud of.

  2. The final paragraph really encapsulates all that it most depressing about Wales: its failure to harness its assets, “political industrial, educational, and cultural. It should embrace all departments of government and, importantly, make use of all those other actors in Welsh society that reach out beyond Wales.” I say this as an incomer (not sure how long it takes to get residency status) constantly frustrated by Wales’ inability to recognise and exploit its many unique qualities that make it different. Perhaps some of it is simply wanting to be a little England, in the hope that not shouting too much might mean we’ll rub along nicely. Sometimes I think politicians are distinctly embarrassed (or worse don’t know) about what makes it different – especially why and how cultural roots can drive achievement in other arenas. And, of course, some of those politicians don’t want it to be distinctive and have its own policies – reflecting distinct aspirations – for fear of the Union.
    Unless Wales can be accepting of itself and celebrate that richness it cannot expect to be noticed – and successful.

  3. Anyone who has read Richard McGregor’s’ The Party’ will realise that the Chinese Communist Party which makes all the important economic decisions is only interested in countries and companies which produce products that China cannot produce and still needs. China still needs German technology particularly in the area of machine tools and hence the German orders.

    Having an international face for Wales isn’t the answer if the Welsh economy doesn’t produce the products that others in both the UK and Europe don’t want. Economies grow because they are competitive with the result that demand for their products grows. This week’s Economist, for example, has an interesting article on how the Estonia economy has been turned around in the last few years.

    Wales’s problems are no different from the rest of the UK outside of London and the South East. For years politicians of all parties have failed to adopt policies designed to allow the UK to still compete in a changing world. Look at the report by CRESC on the failure of Bombardier to win the contract to build the new trains for Thameslink to see yet another exampe of where it all went wrong in the 20th century. I would much prefer a political system which debated the issues raised by the CRESC report than indulged in the present hysteria regarding phone hacking.

    We really have been treading water in many parts of Wales since the decision of the Wilson government nearly 50 years ago to close coalmines. The screw driver inward investment of the 1970s and 1980s was never the answer. Neither is the Assembly unless politicians concentrate on what they can do to improve the economy. They could start by ending the cosy relationship which exists with too many in the public sector. It is clear that education needs to be reformed in Wales. With the present minister who does after 12 years realise that there is a problem a start has been made. We need to get our infrastructure right and ignore those who see the future in terms of travel by rickshaw. Whilst we argue about improvements to the M4 the Chinese are building a vast industrial complex in Central Asia with a direct rail link to Central Europe. We also need to get our planning system right. Who in their right mind is going to invest in a European region which takes over 5 years to produce a local plan. The LDP system designed to speed up planning has instead become an end in itself designed to keep local authority planning departments in business. Those same departments have to be told that the name of the game is what benefits the economy not the personal whims of the Chief Planning Officer. The Assembly wants to have 4 consortia running education. Why have we got in Wales 22 economic development departments and 25 planning authorities working within artificial boundaries which make no economic sense whatsoever? We’ve already wasted 12 years because of the obsession with constitutional change it really is about time that we saw some action.

  4. I could write a long chapter here but I won’t because it will not lead anywhere. I have tried to help here for years. Still, I am a bit interested in this matter because my heart has been beating for Wales as a country, its history, language and life in general for too long.

    In Wales as well, you have too many people who just guard their own interests and jobs.

    I wrote “a bit interested” because of personal disappointment in the state of Wales as a whole. Health, education, infrastructure, jobs, you name it. I have known Wales for twenty years, been living here for eleven, worked in two top Welsh and Welsh-speaking institutions. If you speak your mind, people do not like you at all. Outsiders are not very welcome, esp. in the smaller Welsh towns and in the Welsh-speaking circles.

    I have a good friend who used to work for the WDA in Cardiff. Here everything was discussed very openly. I also remember Jeff’s very good blog about Wales in the world.

    Wales’ faces internationally of 2011 are mainly those of Prince William and the Duchess of Cambridge, Kate, certainly in Germany. Even the cultural institutions do not reach out enough internationally. I like the Eisteddfod Genedlaethol, one of the best things for me in Wales. You get a few German enthusiasts like some friends who read literature by Sian Melangell, listen to music like Sibrydion, etc. DotCYM – nice idea but many people do not know what Cymru means on the continent.

    There are too many committees everywhere that cannot agree on anything. Every two years or so, you get a headline online like this: Wales needs an international face. It does – but I have seen it getting from good to worse sadly. Economically, there is no production in Wales so it is difficult. From my experiences in Wales I would not invest here. There is no infrastructure. Traveling from Cardiff to North Wales takes too long in the car – and I seldom use Arriva trains, only if I have guests and want to go for a day out.

    In the public sector you often have too many lazy people. You should investigate some of these places to save money and spend it on things that are important.

    I agree totally with what Peter writes above.

    I could not imagine a life in Wales without speaking the Welsh language. I think one should but on the other hand, if you exclude people who do not speak Welsh you will lose also. Here lies the success with countries like Latvia, Estonia, the Eastern European countries. They all speak English in order to make good business deals.

  5. Just read that a multi million-pound scheme promoting Welsh lamb in the UK, France, Italy and Germany has been announced. I think it is a very good idea. Excellent news!

    Another thought is the tourism industry. Wales needs to provide much better services. In Cardiff it has changed for the better over the last twenty years but especially in North Wales things still need to improve. It is not nice for holiday-makers when most coffee houses shut at five. Aberystwyth is dead now in July with all the students being gone and just the occasional day-trippers. Staff need better training.

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