When Henry Fitz-Ailwyn became London’s first lord mayor in 1189, Chinese civilisation was already about 3,000 years old. The population of England’s largest city was fewer than 30,000, while Hangzhou, capital of the Southern Song dynasty, was home to more than a million people. China’s standard of living was well ahead of Britain’s, and in the following century European traders began travelling the Silk Road through central Asia to buy its luxury goods such as silk and porcelain. They also carried back a stream of inventions, including the compass, gunpowder and printing.
Under later dynasties, the Middle Kingdom slipped into decline, while London rose to become capital of a global empire and then a leading international financial centre. But now Europe is again sending its emissaries and traders to the east in search of wealth and opportunity.
One of them is David Brewer, who, until last weekend, when he was succeeded by John Stuttard, was London’s 678th lord mayor. In September he led a 60-strong delegation on a 10-day trip around China to sell the City of London’s services to Chinese businesses. The lord mayor’s rather medieval office is at the forefront of the drive to promote the UK’s financial services industry around the world - despite concerns in the City about whether this 800-year-old institution is capable of filling that role.
On a warm Sunday morning, I join the delegation of senior City figures, professional advisers and investors on a coach trip to Hangzhou, south of Shanghai, in the centre of China’s entrepreneurial heartland. Marco Polo described it as “the city of heaven, the most beautiful and magnificent in the world”, and tourists still come from all over the world to see the beautiful West Lake with its traditional Chinese pagodas and temples. But Alderman Brewer and his party are making this three-hour journey to persuade its fast-growing businesses to come to London to raise capital - from its venture capital investors or through a listing on its stock exchange.
The lord mayor, a stocky 66-year-old dressed in smart casual jacket and trousers, leads his party into the Hangzhou World Trade Centre hotel, an anonymous concrete block facing on to a three-lane highway choked with traffic. On the ground floor, manufacturers of bathroom products are holding a trade fair, but we head up several floors to a conference centre, where more than 20 local businesses are represented. The host is London Asia Capital, a UK-based merchant banking group that has brought seven Chinese businesses to the London markets and hopes the Lord Mayor’s presence will encourage others to follow suit.
It should be easy, with Tokyo’s stock exchange moribund after more than a decade of economic stagnation and New York’s markets made increasingly unattractive by the new layers of post-Enron regulation. But the session appears to start badly when Jin Shengshan, Hangzhou’s deputy mayor, steps up to the podium under an enormous red banner welcoming the delegation in English and Chinese. Plenty of western investors have come to the city in search of opportunity, the sharply suited deputy mayor says, but British companies have been scarce.
“More than 8,000 businesses in Zhejiang [province] have received investment from outside China, but none have received investment from the UK,” he says. While 13 local companies had floated on overseas stock exchanges, none had gone to London.
Brewer is an old China hand, however, and has a well-rehearsed speech that presses all the right buttons. “I first came to China 25 years ago and this is my 105th visit. I am the 678th lord mayor of the City of London, and you will all know that eight is an auspicious number.”
Then comes the sales message. London has become the largest international financial centre, he says, because it can handle transactions on well-regulated markets with transparent and efficient operations. Companies that come to London from China will benefit because the City’s high standards of corporate governance and accountability make them attractive to international investors. Finally, the personal touch, with a presentation to the deputy mayor of a model of Mansion House, the lord mayor’s official residence in the City. Pointing to the front door, Brewer says he looks forward to welcoming Jin when he comes to see for himself what London has to offer.
The next business is the presentation of certificates to London Asia’s Chinese branch managers, to encourage them to seek out the most promising Chinese companies in their regions. Each of the 32 comes up on stage to the thumping beat of Johann Strauss the Elder’s “Radetzky” March, is presented with a framed document confirming their status and poses for a photograph with the lord mayor.
“These will have pride of place in their offices and will inspire them for years to come,” says Simon Littlewood, the Oxford-educated accountant who is London Asia’s chief executive.
Next Mi Dengfeng, the youthful-looking head of London Asia’s operations in Xi’an, harangues the conference on the challenge ahead - and the opportunities. To demonstrate its results, he introduces Zhang Jianguo, chief executive of China Biofoods, which manufactures food supplements. He proudly tells them it had been listed on London’s Ofex Plus market two days earlier, under the tutelage of London Asia.
Finally, a shaven-headed Buddhist monk in saffron robes is invited on to the stage, to be introduced as the company’s spiritual adviser and to endorse the product.
“The essence of Buddhism is goodness to people,” says Shi Yan Zhuo, kung-fu master of the famous Mount Songshan Shaolin temple. “Mr Zhang’s company makes good products, using a Shaolin temple formula.”
Then he poses for photographs with the lord mayor and, in exchange for a model of Mansion House, presents him with a collection of CDs of Buddhist meditation routines.
Alderman Brewer’s year of office formally ended on November 10, when he handed over the sword, mace and other badges of office to Stuttard, a partner in accountants PricewaterhouseCooper. The 679th lord mayor travelled from the City of London’s Guildhall to the Royal Courts of Justice to swear allegiance to the sovereign in front of the judges of the Queen’s Bench - as required by the charter granted by King John in 1215.
The journey from Guildhall is made in a horse-drawn, ornately gilded coach as part of the Lord Mayor’s Show, a three-mile procession of floats representing the City’s businesses, livery companies, charities and police force. Dressed in the medieval robes of office, Stuttard waved his plumed hat at the tens of thousands lining the streets in a display of pageantry that ended with a Thameside firework display.
His year in office will be marked with several set-piece ceremonies. The first was the lord mayor’s banquet at Guildhall last Monday, in honour of his predecessor. More than 700 guests were present to hear the prime minister review the country’s international position in the presence of leaders of church, state, commerce and the judiciary. The foreign secretary will address London’s diplomats at the Easter banquet, and the chancellor of the exchequer will give the annual Mansion House speech at the bankers’ dinner in June.
The lord mayor provides hospitality for visiting heads of state and foreign dignitaries on behalf of the Queen and her government, receives overseas business leaders, and maintains links with other UK financial centres that London regards as part of the “City” brand. He or she - there has been one woman - is the City’s chief magistrate, admiral of the Port of London and chancellor of City University, and presides over meetings of the Court of Common Council and Court of Aldermen, the governing bodies of London’s financial district. The year will be packed with attendances at fund-raising events organised by the City livery companies, and more than 600 speeches on subjects from financial matters to charity and patronage.
But behind all the pomp and pageantry, lord mayors now have a more serious job to do. They act as figurehead for the campaign to sell Britain’s financial services around the world - a role whose importance to the country the government has only recently recognised. Having been cool about the City (and downright hostile to sectors such as the high-street banks), Chancellor Gordon Brown has thrown Whitehall’s weight behind the promotion of London as a global financial centre, appointing Ed Balls, his closest confidant, as minister for the City earlier this year.
Financial services account for around 10 per cent of UK gross domestic product, providing employment not just in London but in other British financial centres such as Edinburgh, Leeds and Bristol. And while manufacturing industry has shrunk rapidly with the ascent of China and other Asian countries, London’s history and expertise give it rare competitive advantage against not only its European competitors but also financial centres in other regions. Michael Bloomberg, New York’s mayor, has become so concerned at London’s growth that he has appointed management consultants to look at the problem. “Long-term, the city’s main competitor is London,” he said in September. “The amount of innovation going on in London and the new business information in London is a really worrisome thing for New York City.”
Lord mayors have long travelled the world extolling the virtues of doing business in London - spending between 50 to 80 days a year outside the UK. Now Mansion House works much more closely with Whitehall to ensure that the visits deliver the maximum impact for Britain’s financial services industry.
Brewer’s autumn visit to China was his second in office - the first took him to the south, to Shenzhen and Chongqing as well as Hong Kong. This time, the itinerary started in Beijing, moving on to Shanghai and Hangzhou, and then Tianjin, Shenyang and Dalian in the north-east.
In Shanghai, I sit in at a ceremony to mark the 10th anniversary of the partnership agreement between the City and China’s financial capital. The delegation files into a sumptuously decorated room at the municipal hall, and sits in two rows on one side. Senior Shanghai officials sit opposite, and in the middle, two large chairs seat Brewer and Han Zheng, Shanghai’s powerful mayor (and, incidentally, a keen Arsenal supporter).
As television cameras film the event, Han says he wants to deepen the relationship - exchanging talents, as well as ideas. He presents the lord mayor with the city’s golden magnolia medal, in recognition of the links between the two cities.
“Shanghai is a young city that is only 700 years old, but it is even younger as a financial centre,” he says. “I hope this anniversary will be an opportunity to expand co-operation.”
Brewer, wearing his badge of office on a heavy chain around his neck, thanks the mayor, mentioning that references to the magnolia tree’s medicinal qualities date back to 1083. In return, he presents Han with the City’s silver dragon medal, noting that China and London share the mythical creature as a symbol, with dragons guarding the entrances to the City.
Earlier, the business delegation had met the administration of the Pudong New Area across the Huangpu river from the Bund, once the headquarters of European banks such as HSBC. Today they have moved to the spacious, modern financial district, along with Shanghai’s stock exchange, futures exchange and soon-to-be-opened financial derivatives exchange. The City representatives wanted to establish a direct relationship with Pudong’s civic and business leaders, so that London will continue to be the international centre Shanghai chooses to work with.
The reception is friendly, with Wan Daning, Pudong’s deputy governor, saying he had spent several days in the City of London with former president Jiang Zemin, and wanted to learn more about how it was governed and its infrastructure. He had been particularly impressed with the City’s transport arrangements and facilities for workers - like much of old Shanghai, Pudong is gridlocked and it is short of the bars, restaurants and shops necessary to attract residents.
“We have failed to develop urban functions,” he says. “We need to restructure local institutions and the local economy so that economic growth is sustainable.” Michael Snyder, chairman of the powerful policy and resources committee - which in effective runs the City day to day and has spearheaded the creation of its international office network - offers to set up a series of regular meetings to share information.
At each of the stops on the lord mayor’s tour, a “Going Global” seminar is staged, at which City financial advisers explain the advantages of a London listing and how companies can raise venture capital in the City. In Shenyang in the north-eastern rustbelt, the audience includes sober-suited executives from state-owned enterprises such as the steelmaking Beigang Group. But there are also trendily dressed young entrepreneurs from small companies such as Astron, a zirconium-mining business, whose MD, Kang Rong, says she wants to know more about the world’s stock exchanges.
“When you go into the seminars, there are many casually dressed men who look about 18,” says Neil Sampson, a partner at Rosenblatt Solicitors, which specialises in helping smaller companies come to the London markets from China. “In fact they’re probably at least 40 and running substantial businesses.
“These trips don’t yield much directly, but they provide a lot of contacts,” he adds. “If just one of these turns into a deal, it makes the effort and expense worthwhile.”
Other delegates have joined the lord mayor because of the access he gets. Simon Culhane, chief executive of the Securities & Investment Institute, which promotes professional standards in London’s capital markets, says joining the trip helped him cut through the difficulties the SII had experienced in trying to start operations in China. Five previous visits had failed to find the right body to apply to - despite the best efforts of the British embassy in Beijing and the Chinese embassy in London.
The success of such delegations relies in large part on the character of the lord mayor. Brewer is a particularly effective operator in Asian countries, say several members of the delegation, because he opened the Tokyo, Beijing and Mumbai offices of Sedgwick, the City insurance broker. Since then he has spent around three months a year in Asia, keeping in touch with the company’s local employees and expatriates. He is at ease in the big set-piece engagements, unflappable and twinkling as he sidesteps potential bear-traps.
Alderman Stuttard is likely to be equally at ease, since he too has spent time in China, as executive chairman of PwC’s Chinese operation for five years. But there are concerns in the City that the arcane processes by which the lord mayor is elected mean London will not always be so well-served. In particular, the requirements that he or she is both elected from among the 25 aldermen and has served as a sheriff are thought to debar many capable individuals.
The selection process is lengthy and can only be contemplated by someone capable of devoting a large part of their time to the City’s unpaid civic duties. The role of alderman, for example, is a six-year commitment and involves becoming a magistrate - election automatically elevates the holder to the bench. A would-be lord mayor must also first be elected sheriff, an office descended from the “shire reeves”, who predated the lord mayor and governed the City as the King’s representatives, collecting royal revenues and enforcing royal justice. Today’s duties include helping the mayor with his official duties and dining with the judges at the Central Criminal Court in the Old Bailey, where sheriffs have official residences. The shrieval year of a sheriff is seen as a testing-ground for any alderman who aspires to be elected lord mayor.
The City of London Corporation is currently discussing whether to relax these requirements, for example by allowing councilmen (just under 100 are elected every four years) to stand for lord mayor. However, its legal advisers believe that such a change would require parliamentary legislation, something the City is keen to avoid. Its unusual form of democracy is controversial among some politicians: voting is open not only to residents but also to City businesses - including those that are foreign-owned.
The committee has rejected lifting the requirement to serve as sheriff, saying it is a sensible preparation for such a high-profile office. It is, however, looking again at the need for aldermen to serve as magistrates, with a view to attracting candidates who cannot commit the time on the bench. This will not be enough for City leaders who are concerned that candidates for the mayoralty four or five years hence are not of the calibre of David Brewer and John Stuttard. Others worry that the structure of the mayoralty - a strict one-year term - is also failing to make the most of the position’s potential.
“The mayoralty does a very good job for financial services, but I worry that the lord mayor’s term is too short to build lasting relationships,” says one delegation member. “Once a mayor stands down, he or she has no further role to play - despite what has already been achieved. Sometimes those relationships take years to bring results, and I wonder if it would be a good idea to create a one-year role for the past mayor and even a similar position for the mayor-in-waiting. Each of the three could then take de facto responsibility for particular regions over a three-year period.”
Some City figures point to the activist role of that other mayor of London - the democratically elected head of the Greater London Authority. The current incumbent, Ken Livingstone, has taken seriously one of the tasks of his office, which is to promote the City’s reputation and status as the world’s leading international financial centre. Livingstone’s championing of some great modern buildings is probably the most conspicuous of his contributions towards giving the City a more modern shine. In the lord mayor’s office, there is acknowledgement of the complementary roles of the old and the new mayors.
But Jack Wigglesworth, a delegation member and a former chairman of Liffe, London’s financial futures exchange, believes the status quo has served London well.
“We’re lucky to have had a run of senior businessmen who have worked in different disciplines with City businesses that have experience of China,” he says. “It may look like a bit of an anachronism, but it can be very effective. It’s good for the City and good for the country.”
John Willman is the FT’s UK business editor.