Everybody wants to get into the Chinese market at the moment, China is rapidly becoming the world’s largest economy and opportunities in the country are highly sought after by businesses and investors looking to expand their portfolio of offerings. However there’s no secret that many foreign investors have found themselves struggling in China, paying attention to the financial side of a business is vital to maximise profits and minimise losses. Here are some simple tips to get you started.

Be Prepared for Serious Competition and Constant Pricing Pressures

One of the major problems facing companies in China is the highly dynamic nature of the local market. The moment an enterprise reaches a certain level of success then multiple competitors will spring up overnight. Because the playing field is geared for domestic producers, this means in practice that these competitors can get easy and low cost access to capital and preferential treatment in a host of other areas.

This has a rapid “knock on” effect on pricing and many Chinese companies with large cash reserves may be willing to sell at a loss for a period, or worse give away the product for free in the hopes of earning revenue on services.

Goods sold within China do not generally attract high margins (outside of highly desirable highly visible “branded” names) and nor do services. This doesn’t mean that those selling into the local market can’t make money, but it does mean that margins will be considerably lower than for equivalent businesses in the West and that those margins may be under threat at any time. Market positioning is key to avoid failure through over charging.

Getting Paid

Firstly ensure that your credit terms are explicit and in keeping with the local economy, it is highly unusual for Chinese suppliers to offer much (if anything) in the way of credit facilities. The business norm particularly at the start of a relationship is for the vast majority of costs to be paid up front prior to commencing a project with a letter of credit provided to cover the balance. If credit terms are extended they are minimal and never for long periods of duration.

Secondly, you need to be specific about the currency in which you will be paid and where this will be paid. China has strict currency controls and you may not be able to take the currency you’re paid in out of the country even if it’s in your local currency and not in RMB. Some companies may not be able to pay you in the currency you require and may need to engage a “window” company to make the transactions on their behalf.

Finally it’s often said that credit risk management is impossible in China because of the lack of a clear financial system and ratings agencies. This is not the case; it’s just more work than it is in more established markets. You can undertake your own credit risk assessments or engage a consultant to do so for you, while there are obviously no guarantees you can substantially reduce your risk exposure by doing your homework in the first place.

If you are planning to extend your business to the People’s Republic of China (PRC), you should be well acquainted with its people, culture, etiquette, and patriotism. Here are a few tips on business etiquette in China.

People And Culture

China is unique in its culture and tradition. So, when traveling, it is important to adapt to the country’s way of life, its people, and embrace whatever it has to offer.


  • Modesty: People of China are extremely shy. Public displays of affection or even being forthcoming are never done here. However, it is common to see people of the same sex holding hands. They are not considered as a couple, rather just good friends.
  • Patience: Making decisions that would not take much time elsewhere, may just take a while in China. The people here are concerned about making everybody feel happy and comfortable with a decision, which does require a lot of patience.
  • Face value: The Chinese never like to “lose face.” In other words, if a Chinese person is humiliated in public, a fight may just break out.
  • Humor: When it comes to humor, the Chinese are at the top of their game. However, humor related to sex or politics must be avoided.
  • Hierarchy: Chinese people are particular about hierarchy and this is especially true in business dealings. Keep in mind positions held by your Chinese associates, and always remember to show respect if you are lower in position, business-wise.


While traveling, in many parts of China, especially the underdeveloped areas, be prepared to be “looked at.” As far as capturing China on camera is concerned, it is polite to get the consent of people when taking their photograph.

Dining Etiquette

Dining etiquette of the Chinese can make you feel a little uneasy at first, but once you understand their way of doing things, enjoying Chinese cuisine can be a lot of fun.

Take a note of the following:


  • Lunch and dinner at restaurants can be quite noisy, and smoking cigarettes is allowed at the table. Over time, you will get accustomed to it.
  • Knives are absent from the table. You will find chopsticks, soup spoons and bowls. While using the chopsticks, it is recommended that you do not point them in the direction of a person, nor should you keep them standing tall in the rice bowl. Such a gesture is an indicator of incense that is burned at funerals.
  • The meat of pork, poultry or fish is prepared such that it is extremely tender, and becomes easy to remove from its bones with chopsticks.
  • Serving yourself from a communal plate should be done with a clean spoon or with the end of the chopstick that does not go into your mouth.
  • As a guest at a meal, be prepared for surprises. You may notice that your host has ordered much more food than you can consume. This is only to “save face.” Another way of showing hospitality is by serving you, even though you have not asked to be served.
  • According to Chinese custom, it is the host that pays for the meal. This excludes a get-together of friends. However, it is polite to always offer to pay. It is not uncommon to find two people quarrelling to pay after a meal.
  • If you are invited for a meal, be prepared to be served as you are the “honored guest.” You should do the same if you have invited your Chinese guest over for a meal.
  • Using chopsticks is sheer delight to your Chinese host. However, if you are not comfortable using them, stick to the cutlery on the table if there is any.
  • It is recommended never to begin a meal while speaking on matters related to business. Allow your Chinese associate to bring up the subject. Talking about the country’s weather, landmarks, places of interest, your previous tours, art, and music, as well as making compliments about the food and ambience of the restaurant are topics to discuss about prior to the subject of business. Using terms like “Red China” or “Mainland China” should also be avoided.



Tipping used to be an illegal practice prior to the 1980s. Now, things have drastically changed. Drivers, tour guides, and in hotels the bellboys and housekeeping staff do expect a tip for their good service. However, in local restaurants it is not customary to give a tip as the bill already includes a service charge of 10 to 15%.

Dress Code

When attending a meeting, men should be dressed in a suit and tie. Avoid bright and colorful ties. Loud, vivid colors indicate your disrespect for your associates. Tuxedos are unheard of in China.

Women should avoid low necklines and stick to muted colors like white, tan and brown. Flat shoes fit well for business meetings, while high heels are ideal for a formal gathering.

In terms of casual wear, jeans are acceptable for both men and women in a casual space. However, shorts should be avoided unless you are exercising.

Business Card Etiquette

While presenting your business card, remember to use both hands and bow forward slightly. Ensure that your card is also printed in Chinese, with your job title printed in the front. This implies your eagerness to carry out business dealings in China.

Giving Gifts

Presenting gifts to your Chinese business associates is customary and should not be taken lightly. Here are a few tips on gift giving:


  • Purchase gifts before entering the country, so as to not forget anybody.
  • Present the gift in front of everyone and ensure that the receiver knows it is from the company and not from you.
  • Avoid taking a photograph while presenting a gift.
  • You also need to keep in mind the type of gift being given, as per hierarchy.
  • The value of gifts should be moderate as anything above would lead to the suggestion of corruption.
  • Items like white flowers, umbrellas, handkerchiefs, knives, scissors and clocks should not be given as gifts as these are considered unlucky.
  • A pair of anything, which is an indicator of harmony, crafts or handiwork from your country or a pen, is something to consider as a gift.
  • Gifts should not be wrapped in black, white or blue paper as these are related to funerals. Yellow wrappings with black writings are a symbol of death, so this should also be avoided.
  • Gold, silver and red are lucky colors.



While communicating with your Chinese business associates, keep in mind the following:

Do Not Jump In: After you have asked a question, wait for your associate to answer. He or she may take some time. You need not fill in the gap of silence.

Do Not Bow: Bowing is an age-old tradition and is not practiced these days.

Have Your Own Interpreter: Having a private interpreter is advantageous, as you will get to know about the mistranslations or what you missed after a meeting.

Addressing Etiquette: When addressing your Chinese associate, you need to do so by calling them “Mr., Miss, or Madam” followed by their last name. When introducing themselves, their last name is usually presented first. Getting the correct pronunciation is also important. Slang and jargon should be simply ruled out while in a business meeting.

Do Not Say “No”: Saying “no” to your business associate is considered rude. It is better to say “maybe.”

1. Ownership: 100% ownership of the business it is highly recommended. Many experts and burned out past investors believes that any other ownership combination will not guarantee success. I strongly suggest opening a company that you have complete ownership of and staying away from joint ventures. According to a study done by China Economic Research Center, close to 70% of joint ventures has failed. The only good alternative is to establish a joint venture with a foreign company that you know and that will share the business expenses. If you have no other choice but to go with a partner, chose your partner among potential suppliers, customer, or a partner from an entire different industry.

2. Facility / Product position. Stress first class appearance and quality requirements for your facility, office and products. You will be judged by the difference (higher standard) of your local competitors. What is acceptable for a local company will not be acceptable for your foreign-owned or even JV Company. Stress physical appearance, English signs and slogans in the office and factory. Fill your company with several foreign employees. Your Chinese customers are buying your products to increase their own prestige and impress foreign and local buyers by heaving worldwide recognize equipment. Chinese manufactures love to show that they have used the same equipment as the best foreign companies. Do not lease/build office or facility above your minimum requirement. Minimize your fix cost. Bigger is not better.

3. Location, location, location. This principal is universal. Choose a location that is easy to do business and the local government is friendly to foreign businesses. Generally speaking, this means doing business in the central, southeast, southwest or south of China. Shanghai, Kunshan, Suzhou, Guangzhou those are friendly territories. Check with local cultures and opinions on which regions have a good reputation for doing business. Southerners are considered to be harder working people from the Northerners. Southerners are more business oriented. Anhui people are known for their honesty and are generally good to do business with. If you chose the right location you can, register company, built facility and start your production in several months – guarantee. The rent for an industrial facility will range from100 RMB to 400 RMB per square meter per year. The rent will depend on the size and location of the facility. The construction cost will be from 600 to 1600 RMB per square meter. If you choose to lease the facility, beware of management and maintenance fees that could be hidden in fine print. Beware of the gas, electric and water agreements. The biggest obstacle for quickly opening the facility is the Environmental Evaluation. Be careful with how you describe your operation in an environmental application. For the facility location consider employees transportation needs and labor availability for specific location.

4. Market. Do not expect 1 billion customers knocking on your door to buy your product. The Chinese market is highly competitive and much segmented. The most important question is not how much you can sale to Chinese customer, but how your Chinese operation will influence, improve or help your operation in the USA, Europe or worldwide (depending where you do your business now). After you figure out the answer to vital question mentioned above, you will have a chance in succeeding in China. Place your focus to support niche, undeserved market with less competition. Choose technology or services that are not available or easy to copy. Yes, you be copied faster than a blink of an eye. Protect you intellectual property by being very active in the market place. Try to protect your intellectual property by dividing tasks among several employees and vendors. The only way to stay competitive is to be ahead of your competitors with your product’s future and quality. Make conscious business decisions of when you would like to position yourself in China and stick to your decision. Do not assign unrealistic business goals for your Chinese operation.

5. Lost and Profit Statement Everything you hear must be divided by 2; except your cost, which needs to be multiplied by 2. Expect half true information and half of your expectations. The laws are changeable; but try to do business according to your best understanding of the laws and official policies. Do not bribe, encourage or silently approve it. Bribes are not only illegal, according to US laws, but if you give/take bribes, soon you will not be able to understand who has offered the bribes, and for what reason. You will stop trusting your employees; and, most importantly, with time you will “lose face” among your most loyal employees. Beware of the rapidly cost of manufacturing increases. Most Chinese companies stress sales volume and have ability to cut the cost / price much better than you can. Sooner or later you will run out of money, regardless of how many orders you have.

6. Name Choose a Chinese Name for your company. Honestly, I am not kidding. The brutal truth is that foreigners are guests of China and we are here because we are providing something that China needs or wants. Chinese people are one of the most entrepreneurial people in this world. The national pride will always be a prevailing motivation for purchasing and employment decisions in the future. I will always recommend choosing a nice sounding Chinese name for the company. Maybe it will be drawn back in a short time; but in the future, it will be to your advantage if your company is perceived as successful local company.

7. Employees Chose younger or retired workers. Hire younger, more energetic employees for the future growth. Hire retired workers for their specific expertise and for a specific task. You will have a relatively high turnout of the younger employees, but the older employees will bring more stability. In China, even 50 year old employees can retire from a state company. Sign a contract that includes specific times with younger employees before you send them for foreign training. Be on the lookout for English sugar lip speaking employees. They are in high demand and will most likely leave you at the first opportunity they receive that seems better to them. Treat your employees as part of your family: organize trips, celebration dinners and follow Chinese tradition. Bonuses should be paid during the Chinese New Year Holiday, not Christmas! Organize trips during the October national Holiday. Avoid perfect English speaking employees that say everything you like to hear. Your employees must be able to communicate perfectly with customers, vendors and other workers. Manage your employees by assigning a small, specific and detailed task so that they understand how to perform the task and when you expect a result. Be firm with your expectations. Do not allow a free interpretation of tasks and responsibilities. Do not speak of the future, but speak of present tasks and expectations. Leave the ‘great vision’ and ‘picture perfect future’ for your investor. Be very realistic and strict in your expectations and in what you convey to your employees. Stress studies and self improvement. Organize companywide education courses and trips for all employees. Organize work instruction with very detail description. You will be expected to pay two to three time more just because you are the foreign owned company. Benefit and insurance add 45% to basic salaries. Shop workers basic salaries 1500 to 4000 RMB per month, office workers 1500 to 3000 RMB, engineers from 2000 RMB to 10,000 RMB. Plus 45% for benefits. You are expected to provide dormitory for migrant workers and lunches for all employees. Avoid any ill perception between expat’s and local employees’ compensation level or treatment.

8. Respect Be respectful of the Chinese culture and national holidays. Respect elders, treat co-workers nicely but strict, and leave quarrels to handle by Chinese employees. Be persistent and patient with your partners, employees, vendors and the whole business world. Try to be good corporate citizen working with local government and support local orphanage.

9. Company Governance and Management Style One of the most important sources of power in the governance of the company is the control of the company stamp. No majority of ownership, no majority of the board of directors or who has the right to assign managerial positions is worth much without the control of the company stamp. Yes, sometimes a small, red, insignificant looking stamp may break or make your future in China.

Divide the company control evenly between the General Manager, Vice General Manager Manage, CFO and Chairman of the Board. Do not allow one person to hold too much control or responsibility. In the Article of Association, specify the details regarding all managerial decisions and responsibilities. Try to protect your intellectual property by dividing tasks among several employees and vendors. Be flexible in your management style most procedures are not very clear or straight forward. There always will be a surprises in running daily operation.. How you react to surprises will decide on your success. All is it up to negotiation. If you find yourself in the situation that somebody manipulates obvious facts, stop immediately any further negotiation.

10. Keep an eye on the cash Make sure you hire your own CFO and firmly control this position. Who the General Manager is important, but who is your Chief Financial Officer or Accounting Manager is just as important. All purchases above 50,000 or 100,000 RMB should be signed by the two company officers. Make sure the Chief Financial Officer or Accounting Manager has personally signed all major purchases, invoices and contracts. The most popular financial shames in any Chinese ventures are: bogus names on the payrolls, inventory and asset manipulation, and kickback for purchasing material and equipment.


While mature economies sputter, businesses set their sights on developing markets, with China the primary target. But what exactly are the business opportunities in China?

First and foremost, look to the import or export of products. A primary driver of the Chinese economy has been its ability to manufacture goods cheaply. With wages under a dollar an hour, China can undercut many other international suppliers purely on the basis of cost. Vietnam, Malaysia and other countries are starting to penetrate low-end manufacturing while China moves to higher quality standards, better workplace conditions and increasing innovation.

Perhaps the biggest opportunities lie in export to China. China’s domestic consumerism is growing rapidly and well-off Chinese have developed an appetite for Western products, believing that many Chinese products are inferior.

Luxury goods are in particular demand. This isn’t surprising given China’s expanding wealthy class — the latest Forbes report on the wealthiest Chinese reveals that there are 128 Chinese billionaires.

Countries like France and Italy are working hard to develop Chinese interest in wine, beer, spirits and other beverages. And certainly the Chinese are keen to experience these new, sophisticated tastes.

So what about real estate? Only a few years ago it seemed that real estate investments, almost anywhere in the world, could do no wrong. I have personal experiences with friends who explored opportunities in China real estate only to be scared away by reports of declining prices and tricky regulations. It is said that many buildings on key land in major Chinese cities sit largely empty. So do you take the contrarian view believing now is the time to buy? It’s impossible to know the answer.

Franchise opportunities is another area to explore. Of course, KFC, Pizza Hut and McDonalds have found customers by the millions in China, but how do other brands fare? It seems hit and miss and highly unpredictable. I’ve heard lawyers discuss “sure things” that have fallen flat while being completely surprised but unexpected successes. It’s hard to understand or predict the behavior of this developing Chinese market.

Over the last decade China has spent billions of dollars on infrastructure projects, from bullet trains to improved highways. In fact, the just-launched Shanghai to Hangzhou line travels an amazing 400 kilometers an hour.

Recent areas of particular interest in China, based on headlines and buzz, include securing energy and mineral rights abroad, health care, engineering and IT.

Actually China is the fastest growing market in the world. It’s just a question of time (exactly it’s a question of next five years) when it become also the biggest market for luxury goods in the world. Currently it is in the second position, just after Japan.

Under the name of luxury goods we understand items not so necessary but very desirable, possession of which gives a sense of comfort and indulgence. Most of them belong to one of these sectors: fashion, accessories, footwear, perfume, cosmetics, jewellery and lingerie.

The recent 21st Century Deluxe 2009 Report effectively describes what types of products are most wanted in China. For all the high-end Italian brands it seems to be an opportunity not to be missed. Until recently the purchases were made with little awareness – today situation is completely different. Rich Chinese know exactly what they want and what they need. That’s why many fashion houses are looking to open more boutiques in the country of the Rising Sun. But luxury is not only fashion and accessories – it’s simply a lifestyle.

Here are the brands favored by the new rich Chinese:

Jewelry & Watches – Cartier (France)
Fashion – Gucci (Italy)
Airline – Air France (France)
Hotels – Peninsula (Hong Kong)
Alcohol – Martell (France)
Cars – Mercedes-Benz (Germany)
Christmas gifts – Omega (Switzerland), Swarovski (Austria)

Crisis? Not for Chinese millionaires.

The Chinese people love and buy luxury goods. Their passion for luxury is irresistible and the market seems to be rising despite global crisis. In 2009 they bought a quarter of the luxury goods produced in the planet, at a total of 9.4 billion USD. This sum could be even higher, if account were taken of the purchases made by the Chinese outside the country. It is undoubted opportunity for all those who want to start their own business in China. Business opportunities which offers the country widened to a new field.

This trend has been noted by luxury brands (mainly French and Italian) which invest all the time in Chinese market. Louis Vuitton, Bally, Gucci, Salvatore Ferragamo are one of the first brands that have opened their first stores in the country of China.

Customer Profile

Among those who drive the situation on the higher-end products are mainly young people of China that are 20 years younger than their counterparts in the United States and Japan. It is the new rich class that are potential consumers of the best quality goods. China has great potential for this type of market, primarily due to the huge population living in large cities. Not without significance is that the young consumers wish to emphasize their status. Being an influential person of high social status impresses others. And how to let others know with whom you’re dealing with? Of course with branded gadgets.

It’s also worthy of note that young Chinese accepted very quickly “shopping and mall culture”. In 2020, seven of the ten largest malls in the world will be located in China. But Chinese like to shop abroad as well. Mainly because it is often more cost-effective. That’s why they often travel to shop in Europe’s designer fashion boutiques. According to The Word Trade Organization about 100 million of Chinese will go abroad in 2020.

Which are the basic strategies for those who plan the opening of luxury brands in China? First of all, investment in promotion of new brands with sufficient incentive to the client is very important. For example, organizing promotional, closed events necessarily with the presence of celebrities. Second of all, it is necessary to involve local elements to the production of luxury brands, mainly by moving the factories into China and by cooperation with local partners.

The UK Border Agency have announced the introduction of a new Olympic/Paralympic Games visit visa for Games family members wishing to enter the UK to take part in specific Games related activities in the lead-up to London 2012.

Games Related Activities

Examples of Games related activities include:

  • Meetings with London Organising Committee for the Olympic Games (LOCOG)
  • Participating in UK based training camps as part of a national team;
  • Participating in individual sport Olympic/Paralympic test events.

Games Family Members

Games family members include athletes, coaches, officials and accredited media. To be eligible to apply the Games family member must have been identified by LOCOG, who must issue an official invitation letter inviting them to visit the UK for a purpose connected to the Games.


Olympic and Paralympic Sports

The UK Border Agency have produced an exhaustive list of Olympic and Paralympic sports which is available here                                                                                      (link to http://www.ukvisas.gov.uk/en/ecg/visitandtransit/sportsvisitor). Any sport outside this list will not qualify.



Prospective applicants can apply up to 3 months before they intend to travel to the UK and are advised to apply at least 2 months in advance to allow sufficient time for their application to be processed.

Applicants will need to attend a Visa Application Centre in their country of residence to submit the application and enrol their biometric information. In addition to a signed invitation letter, applicants will need to provide evidence of how they intend to fund their trip and may also wish to consider submitting evidence of their marital status, itinerary, occupation, income and their association with the Olympic or Paralympic sport.

Successful applicants will receive a visa that is valid from the date of issue until 8 November 2012, irrespective of the date of the application. The maximum stay in the UK on any one visit is six months and it will not be possible to apply as the dependant of a Games visitor or switch from the Games visitor visa into a different immigration category.


How Can Paragon Law Assist You?

Paragon Law are specialists in UK immigration law. Through our offices in the UK, China and India and our association with NeJame Law in the USA, we are well placed to assist individuals seeking to enter the UK on an Olympic or Paralympic Games Visit Visa. To find out more about this type of visa and how Paragon Law can assist you then please call Thalej Vasishta in our London office on +44 (0)845 519 6966 or email him on thalejv@paragonlaw.co.uk.

Business lunches and negotiations are obligatory events and nobody denies or calls it in question. What is always necessary to know? What are the basic requirements? At business lunches, seating follows a strict business protocol. That is to say, you cannot just come and take any seat you want. The rule is the following here: the most honorable guest or the head of the negotiations is likely to be seated facing the door. Furthermore, at a business lunch you should never get down to business right away.

That means that you should start with common questions and find common ground with the negotiations participants and then everyone will automatically pass into business talks after a while. During a business lunch, a toast is proposed, first of all by the host and only after that you propose your toast. It is very important to remember. Another rule is “the rule of both hands”: always accept and take everything with both hands. That is important, polite and delicate. Now we will be talking about business cards where “the rule of both hands” will be also mentioned. That is what I briefly wanted to say about business lunches.

Gift giving

Small gifts are always appreciated everywhere but in China there are certain rules which specify what kind of gifts may be given and what ones you should not give. These rules are described in a separate range of issues. One thing you always need to keep in mind is that you should not give a clock or a watch as a gift to the Chinese as it would signify the cutting of relationship. Moreover, do not expect your business partner to open your gift immediately for the Chinese never do it in anybody’s presence. They are not in European habit of showing what is given them as a gift. Why is it so? Firstly, because a Chinese does not want to be an offense to your feelings and give you any reason to think that your gift is cheap. And secondly, a Chinese does not want to show his emotions as they are hidden. This is what I briefly wanted to say about gift giving.

British industry is voicing concerns over the Government’s proposal to introduce a cap on the number of skilled non-European nationals entering the UK to work.

The Government’s rationale is to reduce net migration to tens of thousands and tackle unlimited migration, which, it says, places unacceptable pressure on public services, housing and school places.

The Government’s aim is to demonstrate to the public and frequently hostile press that immigration is under control.

In an area that receives little accurate debate, it should be noted that skilled non-EU nationals who come to the UK to work are not entitled to claim benefits for themselves (or their families) and are not entitled to free housing.

From experience, they often take out private medical insurance and send their children to private schools.

The Government’s stated aim of reducing migration contradicts with their wish to continue to attract the brightest and best people to the UK. It fails to recognise that by imposing restrictions and uncertainty against the best and brightest in the world coming to the UK (and the businesses and services that want to employ them) we will not attract talent but instead lose out to our global competitors.

If a UK business wants to employ a non-EU national, it must register first with the Home Office as a sponsor. They will then be allocated certificates to sponsor non-EU skilled workers.

At my firm we have acted for clients who have been granted hundreds of certificates and also a business which has registered to obtain one certificate to make a strategic hire of an “A” star in their sector. This system was working for employers.

However, July 2010 saw the Government without notice reduce allocations of all existing employers. Consequently, for example, a client with 300 plus allocations saw a reduction to 50. Anyone who wants to register as a new sponsor since the interim limit was introduced will find that they will be given no allocation of certificates with little hope of being able to request an allocation on an exceptional basis.

I advised a niche sector client – one of three in their market in the UK – who had offered a high level post to a leading operations director in their sector based in Australia.

They decided not to pursue the recruitment because of the uncertainty caused by the interim limit and are instead considering transferring operations to Australia. The impact to the UK economy is stark – jobs may be lost to Australia.

There is also uncertainty as to how the cap will work when introduced in April 2011. Will certificates be on a first come first served basis until the annual cap is reached? It is unclear whether the annual quota will be broken down on a monthly or quarterly basis.

It is suggested that a panel of senior UK border Agency managers will have power as to how the allocation of certificates will be distributed in a particular month/quarter.

This begs the question how this panel will deal with competing interests between, for example, a hospital that wants to bring over a leading neurosurgeon and a design company which wants to bring over a leading designer from say, Japan, to fulfill a contract it has secured with a Japanese client.

What happens to the loser in this round? Are they allowed to enter the subsequent month/quarter’s lottery? There are many unanswered questions.

Businesses often plan their recruitment months if not years ahead. We act for Blue Chip retailers who look to recruit trainee pharmacists and trainee opticians while their potential recruits are at university. Because of the lack of interest in studying these subjects amongst UK students, a large proportion of their recruits are international students.

In particular, where small and medium businesses operate, the requirement to recruit foreign nationals can be business critical; that is, they cannot afford to wait to have their foreign talent stuck in a quota queue system.

Moreover, if a UK hospital or university wanted to recruit a leading foreign specialist doctor or academic, that talented person will have other options around the globe other than the UK.

The Government has faced widespread and significant opposition against the cap. It will be better served allowing the current system to bed in further which has sufficient checks to ensure that the system is not being abused.

Currently, a business needs to illustrate that they have tested the resident labour market through advertising before allocating a certificate of sponsorship to a non EU national.

It could take a generation before the resident work force is in a position to fill the gap in the market that necessitates the UK’s current dependency on foreign migrants.

In the meantime, UK immigration policy must encourage businesses which are attracting the best minds, investors and multi nationals globally to ensure that our key sectors remain world class and competitive.

A leading world specialist will inevitably attract the best team around him and this can only benefit the UK in up-skilling its resident workforce.

Instead, the UK’s attractiveness is being hampered, particularly because of foreign press picking up on the hostility towards immigration in the UK press.

The Government still can be forgiven for saying that it got it wrong and that they will not impose the cap.