DeepSeek Phenomenon – a Formidable Challenger and Partner? UK-China Past, Present and Future

🔥Hot topics

  • UK-China relations are thawing, and ties are re-energising – what should you look for?
  • The rise of DeepSeek – what does it mean for the UK?

As we kick off 2025, the business world is buzzing with two major stories that caught our attention: the re-energising of UK-China relations after years of frosty cold, and the dramatic rise of DeepSeek, a Chinese AI innovator shaking up the tech world and capital markets.

DeepSeek’s affordable, high-performance AI models are making waves in industries from healthcare to finance, and causing quite a stir in global stock markets, too.

UK-China Relations – A Thawing Partnership with Strategic

The UK and China are re-energising business and trade links after years of strained relations. This, despite some lingering geopolitical risks, is paving the way for deeper and wider collaborations in renewable energy, AI, and cross-border investment, among other sectors.

Recent high-level dialogues between UK and Chinese officials signal a notable warming of ties, a diplomatic re-engagement focusing on trade, climate collaboration, and technology. For the UK, the exploration of renewed partnerships in green tech—such as offshore wind and electric vehicles — as well as in fintech, is a primary objective. China, meanwhile, is keen on accessing UK expertise in AI and life sciences.

However, the UK’s approach to China is a geopolitical balancing act. It strives to align with Western allies on China policy while simultaneously pursuing pragmatic economic gains. Key areas to watch for progress include joint R&D initiatives and the easing of investment barriers.

Exciting outcomes from the first UK-China EFD in six years. From the UK SME’s perspective, we see this as a good time to ride the trend.
The agreements are expected to add £600 million worth of value to the UK economy over the next five years, potentially delivering up to £1 billion. This could potentially translate into increased funding and investment opportunities for UK SMEs…

For businesses, the sectors to keep an eye on are renewable energy, AI, and electric vehicle supply chains. However, risks such as geopolitical volatility, regulatory scrutiny (similar to CFIUS reviews in the UK), and ESG concerns must be considered. Investors are advised to diversify partnerships while staying alert to policy shifts. A resurgence in Chinese investments in UK infrastructure, particularly in ports and tech hubs, could also be on the horizon.

There are calls for both governments to investigate the potential for joint ventures in green infrastructure and digital trade.

Further reading:

The DeepSeek phenomenon – the rise of a formidable new challenger

DeepSeek’s rise stunned the world in many ways, shocked capital markets and poised to rewrite the rules for the global AI space over the next year, reshaping competition, technological development, and market dynamics.

The Chinese AI startup is seen as a formidable challenger to the dominance of the US tech and AI industry, competing directly with dominant American companies like OpenAI and Microsoft. This could lead to more affordable and accessible AI solutions while challenging the market dominance of established US tech giants, resulting in significant market realignments and possibly driving further innovation in the AI sector over the coming year.

DeepSeek’s entry highlights the intense competition and rapid innovation within the AI sector.

Meeting DeepSeek, the phenomenal new kid on the block, and a few others already there

For the UK AI industry, DeepSeek’s cost-effective and open-source approach could democratise AI development, enabling smaller players to innovate and compete globally. Companies using DeepSeek’s tools are experiencing impressive efficiency gains of 20–30% in their R&D cycles. However, this comes with the risk of potential compliance challenges within Western markets. For investors, it’s crucial to monitor AI ethics regulations and diversify portfolios, including both established players and innovative newcomers like DeepSeek.

It also calls for the government to conduct a thorough audit of AI vendor risks and consider piloting DeepSeek’s solutions for cost-sensitive projects.

Further reading:

💡 Insights

🇬🇧🇨🇳 Bridging UK & China: A 30-Year Reflection

In the first episode of our Talking Business in China podcast in 2025, a remarkable guest, Alan Barrell, Chairman of Cambridge Worldwide Associates, joins host Ting Zhang FRSA, Crayfish.io Founder & CEO, to offer loads of insights on bridge-building experience between the UK and China.  It’s a conversation that spans continents and decades, a personal reflection that delves into the past, analyses the present and looks at the future of the UK-China relationship in the context of business, people, culture, and more.

Have a listen 🎧

📢Before you leave …

Your opinion matters. As bilateral relations between the UK and China warm up, we want to hear your voice, so here’s a simple and quick sentiment poll.

It’s designed to help us understand the current sentiment and challenges facing UK SMEs in the Chinese market so we can improve our services to meet your evolving business needs continuously.

As a gesture of gratitude, each respondent is offered a discount voucher on our eServices at Crayfish.io: 5% off all services over £500, and 10% off services over £3000. Details will be sent to you in the confirmation email after you submit your response.

It takes no more than a minute to tick through.

Take the survey ✍️Cambridge Wireless Ltd Cambridge Network Cambridge Tech Week Greater Manchester Chamber, UK ST. JOHN’S INNOVATION CENTRE LIMITED Ukie

HAVE QUESTIONS OR NEED HELP?