London is a global hub for service firms providing crucial services to multinational companies. In a recent study by MasterCard looking at cities as centres of worldwide commerce, London was ranked top.

London attracts more service sector FDI projects than any other city in Europe – over 320 projects in the last two years alone. These projects were drawn principally from financial & business services and Information and Communication Technology (ICT)
I would like to touch upon London’s strengths in a few key service sectors:-

On IT and Telecoms

London’s IT sector is the largest in Europe and with forecast annual growth of 6% it is also one of Europe’s fastest growing markets.

London leads the way in the growth areas of mobile, broadband and wireless technologies and is at the forefront in developing Europe’s third generation wireless networks.

London is home to all the major IT services firms including: Microsoft, Oracle, Cap Gemini, Compaq, EDS, IBM. Together they contribute to the UK software and IT services market valued at around $55bn in 2007, almost one fifth of the total European market.

The market is expected to grow to $65bn by 2010.

The telecom equipment and mobile handset sectors are also well represented in London with all the major players having a presence including: Nokia, Sony Ericsson, Cisco, Alcatel-Lucent, Motorola, Nortel, and of course ZTE, China Telecom & China Netcom. The UK telecoms market is worth $90 billion - over 5% of the global telecoms market.

On Professional Services

London leads the world in professional services which are a benchmark of international excellence.

Regulatory hub: many leading UK professional services regulators and bodies are based in London including, the FSA (Financial

Services Authority), The Law Society, the Association of Chartered and Certified Accountants(ACCA) etc.

Thriving legal base: five of the world’s six largest law firms are headquartered in London.

And it is also the number one international location for management consulting and accounting.

Key marketing base: London hosts Europe’s largest cluster of marketing services companies and employs more than 100,000 people. International industry bodies based here include the Marketing Society and the Chartered Institute of Marketing, which has over 50,000 members in 130 countries.

Booming advertising sector: the UK advertising industry, centring on London, is the fourth largest in the world. Total UK advertising expenditure is around $36 billion. International, London-bred agencies include Saatchi & Saatchi, BBH, Mother, M&C

Saatchi, WCRS and AMV.

PR and market research hub: London is home to the world’s largest PR agencies; in 2006, seven of the top ten agencies worldwide had their corporate head quarters in London, raising combined revenues in excess of $3.5 billion.

On Financial Services

The UK’s financial services sector is an economic powerhouse in its own right, contributing over 10% to overall GDP, and $35 billion a year to Britain’s balance of payments.

In London, the sector employs some 338,000 people, a third of all those working in the financial services sector in the UK.
London alongside New York is regarded as the leading global financial centre. A new index of indices (Global Financial Centres Index) suggests that London leads New York in several areas of competitiveness: people, business environment, market access, and

infrastructure.

London leads the world in a range of financial services, including foreign exchange trading, international equities trading, fund management, derivatives trading, Euro money derivatives trading, international insurance and bonds trading.

On Healthcare Services

Healthcare in the UK is world-renowned with about 100 hospitals in London alone.

Public healthcare: Employing around 1.4 million and many more in the various supply industries, the NHS is the world’s 3rd largest employer.

An attractive potential customer: With an estimated annual spend of $30 billion, accounting for 80% of UK healthcare expenditure the NHS is one of the world’s largest healthcare consumers.

Significant R&D: UK healthcare R&D investment exceeds $750 million. The NHS provides almost $440 million to ensure the translation of scientific advances into improvements in patient care : London is the leading centre for clinical trials in Europe with more than 50 clinical research organisations located in the capital.

On Creative Industry

London is a world-class leader in film, broadcasting, publishing, music, advertising, the arts, design, fashion and the performing arts.

The 2003 Communications Bill scrapped rules barring non-European Union companies owning the UK’s television and radio businesses, making the UK TV and radio market one of the most liberal in the world.

The UK publishing industry is valued at more than $31 billion. London has 210 newspapers Ten of the UK’s national eleven newspapers are produced from the capital.

London ranks among the ‘big four’ fashion centres alongside Milan, Paris and New York. The turnover of UK design companies is $20 billion annually. It is estimated that London Fashion Week generates over $200 million per annum for the London economy.

More than half a million people are employed in the creative industries sector in London, and 1 in 5 of all new jobs in London are generated by the creative industries.

So why has London been so successful in attracting and retaining service industry investment?

There is no simple answer to this question. First of all you need to go back to our history as a maritime trading nation, which led to contacts all around the world. Today we are the world's most internationally connected city and the most cosmopolitan one too with over 300 languages spoken. The fact that English is the international language of business and English law is used so widely is very beneficial too. There are many other reasons and here are just a few:-

Regulatory regime: "firm but fair" characterises the regulatory climate in the UK. The FSA operates on a principles basis which contrasts strongly with the rules based regime in the United States. The introduction of the Sarbanes-Oxley Act in the US has led to a decline in listings on the NYSE and a corresponding increase in listings on the LSE. Above all we have a history of encouraging inward investment - both green field and through acquisition. There is genuinely a level playing field in our country wherein there is absolutely no differentiation between a domestic and overseas owned business.

Booming economy: London’s economy is expected to grow at a faster rate than New York, Paris or any other established global city and will become the fourth largest city economy in the world by 2020
•Springboard to Europe: London is the gateway to the European Union’s 27 member states, the biggest single market in the world, with a population of nearly 500 million.

Olympic city: London will host the Olympic Games in 2012. Procurement started in 2007. Contracts will be available for firms of all sizes and the total budget will run into billions. London continues to develop and invest in itself: London’s Thames Gateway development is the largest urban regeneration project in Europe. $190 billion worth of major development projects, including the Olympic Park in Stratford, will transform London over the next five to ten years.

•Flexible labour force and magnet for top talent: London is home to Europe’s largest regional workforce — more than 9.8 million, with one in three holding a university degree. It’s also a magnet for highly-experienced senior managers

•Hub for global brands: a third of the world’s largest companies are headquartered in London.

•Sustainability and innovation: London is working to become a world leader in environmental and climate change issues. In additional to the Congestion Charge scheme to address traffic congestion, the Mayor of London is committed to a range of initiatives to promote renewables and energy efficiency in the capital.

Europe's favourite business location: London was voted the top European city for business for the 17th year running in 2006, ranking first for easy access to markets, qualified staff, external and internal transport links, telecommunications, availability of office space and languages spoken etc.

...and not forgetting the fact that London is a great place to live!

Think London

Think London is the foreign direct investment agency for London. We provide free, confidential and comprehensive advice to help international business locate and expand in London.

From identifying the opportunities to finding the right office location, we provide our clients with the connections and intelligence they need – so they can concentrate on launching in London and getting to market fast.

Over the last 12 years we’ve helped over 1000 dynamic companies from 36 countries expand into London, creating over 41,000 jobs. Chinese clients include ChuangSheng Electronics, Crystal Digital, Isunte, Midea, Mindray, Petrochina, ZTE.

It’s all free, flexible and – of course – totally confidential.

Opportunities and Challenges for Chinese service industry

China’s service sector has grown rapidly in recent years, particularly since accession to the WTO, and now accounts for 41% of the

Chinese economy.

As a result there has been rapid growth in the full range of service sectors.

In most developed countries the service sector accounts for 65-70% of GDP so it is clear that as China continues to grow and develop services will be a real engine for growth.

Access to first-class services will be a key factor in supporting Chinese companies to expand their global operations. Thus FDI has a very important role to play

The China Quarterly Venture Capital Report released last month (August) by Dow Jones VentureOne and Ernst & Young shows that fast growing Chinese software and IT companies attracted $935 million in venture capital funding during the first half of 2007. Chinese companies in business, consumer and retail sectors have also attracted significant level of venture capital too.
London and the UK offer significant opportunities for these Chinese companies as they follow international expansion strategies themselves. By way of example, most of the leading Indian software and IT services firms have established operations in London.

Case Study: ZTE

London’s telecoms infrastructure is the most advanced of any city in Europe and is ranked the best city in Europe for the quality of its telecoms. So when ZTE Corporation was looking for a location to serve as its European headquarters, it found London the obvious choice and established its headquarters in Finchley, north London.

ZTE decided it wanted to tap into the UK market as well as target opportunities in Western Europe. Its aim was to challenge traditional telecoms equipment suppliers, such as Marconi, Nokia, Alcatel and Motorola for a share of the multi-billion pound UK telecoms market while establishing a gateway to the rest of Europe from London.

Think London assisted ZTE with its move by providing the company with information on the telecoms industry in London and helping to identify the opportunities the city has to offer. We gave advice on London’s property options and introduced ZTE to solicitors and insurers. We helped ZTE build up a network of useful contacts within the IT sector through an introduction to the London Technology Network, an organisation which aims to improve the profitability and efficiency of business by creating links between industry and London’s universities.

To conclude, London is a magnet for global talent so that the capital offers an access point to the best accountants, lawyers, consultants as well as leading figures in advertising, design, marketing and PR - all the services required to support businesses with global operations.

London offers a huge market for services firms. London’s booming economy is predicted to grow by $80billion in the next five years so I invite you to come to London and embrace the great opportunities it offers you.