Business Focus: Selling Britain to China

The UK is going all out to attract Chinese investment at Expo 2010 – which is set to be the biggest international trade fair in history

The street hawkers of Shanghai may still sell the occasional Mao Zedong wristwatch to nostalgic tourists on Nanjing Road, but modern China's obsession with Western brands is writ large on the vast plasma screen televisions which adorn the glittering towers soaring far above into the milky sky.

The value of celebrity is spiralling upwards here too – a lesson that has not gone unnoticed by British business as it prepares to mount its challenge against the rest of the world at next year's Shanghai Expo, billed as the "Economic Olympics" and the largest commercial event ever staged. The shock troops for the UK's bid to forge still closer links with the soon-to-be No 2 global economy will, therefore, come not from the worlds of commerce, politics or even royalty but from sport, music and the arts.

Two permanent British pavilions, one representing Shanghai's long-standing twin city Liverpool, are setting out to stress creativity and modernity – things that China for all its vast physical resources are perceived to crave badly.

Two world-class orchestras – the London Symphony and the Royal Liverpool Philharmonic – and the English National Ballet will be despatched to showcase Britain's cultural heritage in a country where interest in classical music and dance is growing rapidly. Talks are also under way to secure the involvement of the England footballer David Beckham and his wife Victoria, while it is hoped that at least one James Bond will be there, possibly the most celebrated 007 of all – Sir Sean Connery.

Meanwhile, literary events will focus not on Dickens or Shakespeare but on the phenomenal international allure of Harry Potter and the celebrity status of the boy wizard's British creator JK Rowling to help lure interest in the business leaders waiting patiently in the wings.

Mike Taylor, the creative director of Liverpool Shanghai 2010, believes Merseyside is well placed to exploit its footballing and musical fame with a series of interactive exhibits designed to appeal to the masses in a city which has already spawned its first Fab Four tribute act, and where the weekly vicissitudes of the Premiership are followed with a keen eye. Liverpool, the only UK city to stage a permanent presence at Expo 2010, has already been asked to draw on this venerable heritage to compose a theme song for the event and the Chinese would dearly love Sir Paul McCartney to swing by too.

"The Beatles are known across the world, as are Liverpool and Everton football clubs," Mr Taylor said. "These have international recognition and huge fan bases. These will be our attack brands for promoting the wider values of Liverpool both its commerce and its cultural essence. We hope this will appeal to new audiences across these emerging markets," he added.

It is predicted that 70 million people will visit the Expo site in the six months after it opens in May, most of them from China itself. Research suggests that Merseyside alone could reap up to £55m from its involvement in the event through increased investment and tourism – a reasonable return on a £3m public-private outlay.

While no figures are available for the possible benefits to the wider UK economy, the calculation is that the Government-backed national UK pavilion, built and maintained at a cost of £24m, will earn Britain a still bigger slice of China's outward investment pie – valued in 2008 at $56bn.

Last week, the first of the 60,000 fibre-optic rods that will illuminate the futuristic "Seed Cathedral", sponsored by AstraZeneca, BP, Barclays, Diageo and GKN, were being installed at the UK pavilion. The structure, as big as a football pitch, was designed as a centrepiece by the artist and architect Thomas Heatherwick, whose previous work includes B of the Bang in Manchester, which was demolished this year after being plagued by problems. At the tip of each swaying rod has been placed a seed representing the Millennium Seed Bank at Kew Gardens, illustrating Britain's history in the fields of science, medicine and urban landscaping. It is a subtle message but between them the UK and Liverpool pavilions are expected to attract seven million visitors, more than attended the Festival of Britain in 1951 or the Millennium Dome half a century later.

The man overseeing the Expo 2010 project is Zhou Hanmin, a forceful and fluent English speaker with a penchant for quoting Churchill, who sees the event as an unprecedented opportunity for the 191 countries and 50 international organisations taking part that transcends mere business.

"We will promote this as the largest possible event ever held in the history of civilisation for human gathering under the theme of a better city, a better life," he said. "This is not merely an event for the city of Shanghai or the country of China but for the whole world to chase a very important target – a more harmonious world. Without the strongest support it would not be possible to create this, the greatest-ever event since the first Expo in 1851."

Things have come a long way since that first Great Exhibition of the Industry of All Nations in London. Yet despite its critics, the world fair has marked several sea changes in the world economy. Chicago 1933 heralded a return to prosperity after the Great Depression while Expo '70 in Osaka announced Japan's post-war economic miracle. But nothing has been seen quite on the same scale as Shanghai and it was always going to take more than the small matter of the worst recession in recent history to derail the extravaganza.

The site itself, still rising at breakneck speed on the banks of Huangpu river, is the size of Gibraltar. More than 55,000 people were relocated to make way for the bulldozers, their 18,000 homes demolished and 272 factories closed and moved, along with their 70,000 workers. Hundreds of kilometres of new underground railway have been built, a new deep-water port constructed, airport capacity doubled and a tunnel sunk to bury the unceasing traffic below the Bund waterfront. Sewerage and water systems have been overhauled.

Officials have spent an estimated $50bn getting the city ready in time – more than three times the total cost of the London 2012 Olympic Games. Tang Zilai, responsible for the urban best practice area at the Expo, believes the event marks a shift towards greater social and environmental concerns in Shanghai, as well as boosting the city's challenge to London and New York's financial centres.

"The most important thing is to promote Shanghai in the global competition for investment from multi-national companies, tourists and consumers," he said. "A big event brings investment in infrastructure and the opportunity to stimulate urban regeneration. It also gives us the opportunity for the local economy and to expand the attractions we have for visitors," he added.

Professor Tang believes the Expo will deliver a 3 per cent boost to the Shanghai economy, which fell below the national average last year despite registering 7 per cent growth.

But few imagine that if it were being planned now, Expo 2010 would be on quite such a gargantuan scale. The global recession nearly cost the event its most high-profile exhibitor. For a long time it was touch and go whether the US, banned from providing public funding towards Expo, would have a presence – but "support" from the Chinese authorities eventually saw private sponsors, including General Motors, come good.

Lindsey Ashworth, the development director of Peel Holdings, Liverpool's main sponsor for the event, has big plans of his own – a 30-year, £20bn Shanghai-style redevelopment of the Merseyside waterfront that he hopes will one day be home to 50 skyscrapers. The centrepiece for the first phase of the development will be the Shanghai Tower, named in honour of Liverpool's twin.

Mr Ashworth was in China last week looking for a local partner on the venture, which is expected to get planning permission during the Expo. He has little time for those deterred from long-term decisions by what he sees as short-lived economic turbulence. "You are always either coming out of a recession or going into one. It will be very different in five years. A recession is the time to start building something," he said.

UK plc: In the Far East

*Standard Chartered is one of the biggest UK companies in China, according to the China-Britain Business Council, and has operated in the country longer than any other British bank. It provides much of the finance for Chinese investments in Africa.

*HSBC began life as the Hong Kong and Shanghai Banking Corporation, and its subsidiary in Hong Kong still bears the name. Established in China in 1865, HSBC aims to have 100 China branches by the end of the year, employing 45,000 people.

*BP has between $4bn and $5bn of investments in China, including four petrochemical manufacturing plants. The group also has a gas field that provides gas to Hong Kong.

*Shell also has petrochemical joint ventures, including what was once the biggest Sino-foreign deal. The British company has a large lubricants business and a retail sales operation in three Chinese regions.

*Rolls-Royce engines power more than 400 aircraft owned by China's 12 airlines. As well as aero engines, Rolls has a marine engineering business in Shanghai and a turbine component joint venture in Xian province. It has offices in Beijing, Dalian and Hong Kong and claims that demand for nearly 3,000 aircraft from China will require 6,500 engines, valued at $65bn, between now and 2026.