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Every few years, an issue comes along in the business world which every company director is told they simply have to be prepared for. Remember the run-up to the Single European Market in 1992? The Millennium Bug in 2000? The launch of the hard euro in 2002?

Some issues are less time-specific but are nonetheless equally pressing. One such issue, for the last few years, is the opportunity China provides for British companies. China, as is well-known, is opening up at an impressive rate. And, while it is a country still weighed down by heavy bureaucracy, it is a country that expansion-minded UK businesses cannot ignore.

British investment in China doubled in the five years since 1997, from $5.3 billion to $10.7 billion. That compares with the $11.4 billion invested by US companies in China in 2002. And in the first half of 2003, Britain invested almost £250 million in China, taking the number of UK projects in the country to almost 150. The total number of joint ventures formed by UK companies with Chinese partners, meanwhile, is nearer 3,000. That is an impressive achievement and means Britain is the largest EU investor in China – but UK companies can do more. The question is how?

China’s ambassador to Britain, Zha Peixin, has some ideas. The first of his messages is that British businessmen should know their market. He recently told an audience of British businessmen: “You should first have a better understanding of the priority and practical needs of China’s economic development.”

Secondly, Zha believes, British businessmen must properly understand China’s culture and history. Thirdly, he advises business to look at ways of exchanging methods of business practices. Fourthly, Zha added: “To find a good co-operative partner and form a long-term relationship is perhaps most important.”

This may sound easier said than done. Fortunately, help is at hand. Britain, in many ways, has a head start in China thanks to our historic links with the country. Even after the Communists came to power, British companies were taking the initiative in China – a particularly famous meeting took place 50 years ago, despite various restrictions put in place by the Chinese government.

As a result, there are numerous organisations that exist to help UK businesses in China. Perhaps the best-known of these is the China-Britain Business Council (CBBC). It should be the first port of call for any UK company contemplating doing business in this fascinating country. Its website – www.cbbc.org – is packed with useful hints about what to do. It has offices in London, Newcastle and Glasgow and six offices across China, and offers free advice on setting up in the various market sectors in China and guidance on aspects of doing business with China.

It also helps obtain translation and interpretation services. Crucially, it also provides help on identifying the potential business opportunities from the Beijing Olympics in 2008, an event on which China is spending an estimated £23 billion. A third of this will be on transport infrastructure – a huge area of opportunity for British business.

The CBBC also offers tips on Chinese business etiquette – which range from stating the obvious, such as not trying to negotiate on your first day in the country while you are still under the effects of jet-lag, to more subtle hints, such as avoiding acronyms, which the Chinese often find difficult to translate. The CBBC, most of whose staff are bilingual, also publishes directories of China’s government, trade organisations and Chinese manufacturers. And it holds regular seminars for members where they can learn more about specific business topics. It also runs events where visiting trade delegations from cities like Beijing, Shanghai and Hong Kong can meet potential customers, suppliers and business partners.

Once in China, business can also benefit by contacting the British Embassy, which has emerged as a great source of support. It has already proved successful in activities like lobbying local authorities on behalf of UK companies, helping UK firms find local agents and distributors and even helping out with publicity material to give the Chinese press.

This brings us to the UK government. Apart from backing the CBBC, it has supported one-off projects such as an event run earlier this year, when it teamed up with its Chinese counterpart to launch a competition to encourage business innovation in China – with the judges coming from the panel drawn from the Chinese and British venture capital community. The idea behind the scheme is to encourage Chinese workers to be more technologically innovative, and to help UK investors identify opportunities in the country’s technology sector.

More significantly, UK Prime Minister Tony Blair visited China in mid-2003, holding a series of meetings with top officials including his Chinese counterpart Wen Jiabao. Executives from top UK companies such as GlaxoSmithKline, BP, Shell, Rolls-Royce, Barclays Capital, Standard Chartered Bank, as well as the Lloyd’s of London insurance market accompanied him. The government agency Trade Partners UK, whose website can be found at www.tradepartners.gov.uk, is also a good source of advice and information for those UK businesses entering China. It can provide details on aspects of business like obtaining the new China Compulsory Certificate, the scheme the country has introduced for marking imported goods.

It is not all good news though. At present, although Britain tops the charts on investment, British exports into China lag those of competitors like France and Germany. One reason for this is that British businessmen, particularly manufacturers, are often suspicious of China. They fear that, once they have started doing business in China, the locals will just copy their ideas and make the products themselves more cheaply.

This may not be the threat it appears to be, however, particularly as the British government is at the forefront of a World Trade Organisation drive to get China to respect intellectual property rights more. However, while manufacturers do lay themselves open to these risks, there are plenty of other sectors offering opportunities. This is especially the case in helping China build up its telecoms, transport and power generation infrastructures.

Similarly, the markets for branded consumer goods and specialist services, like education, healthcare and financial services are constantly expanding and are replete with opportunities for UK companies.A good example of this is Unilever, maker of Birds Eye fish-fingers, Dove soap, Marmite yeast spread and Persil washing powder who have invested some £800 million so far into China, building premises like ice cream plants. Another is Kingfisher – which has been quick to tap into the growing demand for do-it-yourself products; the world’s biggest B&Q superstore has already been built by Kingfisher in China. Visitors to Shanghai find it almost impossible to miss the gigantic shed on the side of the main road into the city.

Perhaps the best-known British investor in China, though, is the oil giant BP. It has been in the country for many years, and recently announced plans to double its spending in the country – even though it has already spent £1.6 billion since it entered in the 1970s. Unlike Shell, BP even owns its own oilfields in the country, although this is not seen as a pivotal part of strategy. Dr Gary Dirks, BP’s chief executive for China, recently explained: “We see China as a growth market, but as a market for products rather than a resource bed.”

To this end, BP is in the process of building 700 petrol stations in China. In a textbook case of how a British company should operate in China, it has done so by forming joint ventures, teaming up with PetroChina and Sinopec – sealing the arrangement by taking stakes in both companies. BP is doing well in China because it laid out a solid strategy and stuck to all of the ground-rules laid out above, such as co-operating with local partners.

Admittedly, it is one of Britain’s best-run companies. But, using the resources highlighted here, there is no reason why many other UK firms may not emulate it.

Ian King has been the business editor of The Sun since January 2000. Before that, he was senior financial correspondent at the Mail on Sunday and a City reporter at both The Guardian and the Daily Telegraph and previously worked for Lloyds bank. He is a regular guest contributor on broadcasters such as BBC Radio 5 Live and Bloomberg Television.

 (This article was originally published in Director of Finance 2004 edition)