It seems only yesterday that China was most regarded as a low-cost production centre for hard-pressed British manufacturers. Now it's increasingly seen for the opportunities it offers as the world's fastest-growing consumer market.
However, the significant change in mindset doesn't mean China has suddenly become a mature and Westernised place to do business. Lesley Batchelor, who chairs the Institute of Export, stresses that caution remains the watchword.
"We have to be careful that we don't swing too quickly from one perception of the Chinese economy to another," she counsels. "Yes, there are enormous opportunities for British goods, services and ideas, but there remain significant hurdles, in relation to intellectual property (IP), supply chain development, quality standards and recruitment.
"When companies approach the institute asking for assistance to look at China, the first thing we ask them to do is step back, see where their proposed venture might take them, and to plan how China would fit into their existing business model."
Unfortunately, Batchelor's experiences suggest that many British firms - particularly at the smaller level - are failing to research the Chinese market before deciding to proceed.
"I have to admit that buyers and managers from this country often don't plan ahead as well as the Germans, the French, the Dutch, the Japanese or the Americans - or many other nations," she says. UK corporates are still trying to replicate what they do here, in China, and often seem to think that they'll be OK there because they're British."
Batchelor says it is vital - particularly for smaller businesses - to seek advice from such organisations as her institute, UK Trade & Investment and the East Midlands International Trade Association.
The Leicester-based East Midlands-China Business Bureau has also impressed Batchelor, as has bureau head Jason Feehily and business advisers Min Rose and Bill Woon. The bureau - backed by East Midlands Development Agency (Emda), UKTI East Midlands and the China-Britain Business Council (CBBC) - has identified two key provinces for trade missions; Sichuan and Zhejiang, whose major metropolitan areas are Chongqing and Ningbo, respectively.
Leicestershire has been twinned with Sichuan for 20 years and south-west China's economy is also strong in sectors for which the East Midlands is well known, notably aerospace and agriculture. In autumn 2007, the bureau led a trade mission - including law firms Harvey Ingram and Cooper Parry, and delegates from the corporate and education sectors - to China and they are returning in April 2008.
Refreshingly, the location of the visit was determined by input from local companies. Feehily says: "This was truly business-led. People came to us, saying they believed there was demand for their services in Chengdu and Chongqing. The target sectors ranged from aerospace and agriculture to tourism and education. Just as one example, we took delegates from Loughborough College out in November 2007, to meet decision-makers from China's further education sector. Now they are going again, taking more representatives from FE colleges with them."
Traditionally, relationships between British education providers and the Far East have been based on the desire of the former to attract lucrative overseas students. However, Feehily sees scope for academic establishments from the Midlands to set up research and training centres in China.
Remarkably, three East Midlands SMEs - in the online marketing and IT sectors - who went on the last mission are already planning offices in Chengdu.
"Even we were surprised by that," admits Feehily. "It does underline the opportunities which are available though, if firms do their planning and correctly identify demand for their services or products. The way UKTI and the CBBC have worked together has been exemplary. The preparations for the trade missions, and the visits themselves, have been a great example of team working, and the results are evident."
However, the long-term outcome of such missions inevitably depends on much more than identifying business sectors and ensuring the first points of contact are made. It is vital that Midland firms understand China's fast-changing corporate culture and have identified potential problem areas.
One of the most experienced observers of China's commercial landscape is No5 Chambers' Carole Murray. She studied Chinese at Cambridge University at a time when the People's Republic was barely on the map in terms of business links with the West. Her impressive fluency in Mandarin, and knowledge of China's economy, then saw her find work as an international buyer with the high-profile retailer Liberty's, before qualifying as a lawyer.
And, as Murray has written about China for both the Financial Times and the International Investment Report, she clearly has an impressive pedigree. Unfortunately, despite the raft of advice and data now available about China, Murray believes many Western firms still approach it with a naxefve mindset.
"A lot of foreign entities just don't understand the difference between the old China and the new, and assume that all commercial relationships will work as they might in the most sophisticated cities, such as Beijing or Shanghai," she says. "I've worked on deals where it has later been realised that neither side genuinely knew what the other wanted.
"You really do need support, and some of the best comes from UKTI and the CBBC. If you want to realise just what can go wrong in China, even for multi-nationals, then Tim Cissold's book, Mr China, is a must."
Murray agrees with Batchelor that China has not suddenly become a "can-do' place for business.
"Recently, I've been working on contracts relating to environmental technology, where UK firms have been looking to set up there, and it has proved much harder than was thought," she says. "The special economic zones are filling up fast and companies who need both access to ports and skilled labour are struggling to find suitable sites. Even large-scale businesses are finding it tough."
The corporate structure of a UK firm's Chinese operation needs equally careful consideration.
"If you went back five years, people were only interested in joint ventures. Now they are much more willing to establish stand-alone plants," says Jane Lodge, senior partner of Deloitte's Birmingham office.
"You don't have to partner as much as you did, but it is still regarded as a useful short-cut," says Jeremy Butler, the head of KPMG's emerging markets desk. "However, if you do, it is vital that you reduce your risk by exploring the perceptions and intentions of your new Chinese partner in great detail.
"IP issues are less critical than they were. Most of those court cases are now between Chinese firms, and patent registration is accelerating - albeit from a low base."
Helen McLeod-Jones - the Birmingham-based senior manager of Ernst & Young's Chinese Business Services Group - says Midland companies looking to export to China must also be aware of the fast-changing consumer attitudes.
"Quality is becoming much more important. The middle-classes, which might have bought designer fakes a year or two back, now want the real thing," she says. "Until now, changes in the Chinese markets were driven by the international Chinese brands. Now the domestic ones are coming to the forefront, whether it is automotive, food or fashion.
McLeod-Jones says it is critically important that Western companies decide precisely why they wish to begin their Chinese adventure: "Do they want low-cost production, a route to China's domestic markets, or access to the wider Far East? It's all about asking the right questions, particularly because of the speed at which tax and fiscal legislation is changing."
Jonathan Chamberlain, the partner-in-charge of Wragge's international employment practice, points out that the domestic labour market is also in flux.
"The potential workforce may be huge, but the number who are trained and capable of working for a Western company isn't," he says. "Retention is becoming a major issue, because China's talent pool is very small and a lot of people are fishing in it."
Chamberlain says wage inflation is already significant as Western employers compete with each other for the best talent: "If you can't offer career development and personal promotion, the weapon has to be money. A lot of Chinese firms used to pay in kind, so the idea of being paid cash is very attractive.
"The issue is of major importance for mid-market companies which didn't make an early move into China. The global brands are already there. Owner-managed businesses that are now arriving from the UK are having difficulty recruiting, and pressure on the labour market is increasing."
