Trade with China is firmly back in the spotlight with the Prime Minister's mission to the country earlier this month. Mr Cameron is keen to create a "partnership for growth and reform" with the world's second largest economy and he reported the trip had seen £6 billion in trade deals after the first two days. In the Autumn Statement, we also heard the Chancellor announce measures to help UK businesses to succeed in global markets, including strengthening UK Trade and Investment (UKTI) coverage in China and bolstering plans to increase British exports to the faster growing emerging economies.
But what contribution are Chinese companies making to the UK economy and, moreover, what do British companies need to consider if they want to target China for growth?
We recently published the Grant Thornton 投英 Tou Ying 25 tracker - an analysis of Chinese companies operating in the UK which identifies the 25 fastest-growing by turnover (based on the latest published accounts). It shows that these Chinese companies are making a heavyweight contribution to the UK economy - employing more than 2,600 people and generating revenues of over £17 billion in 2012, an increase of 27% on the previous year.
The growth of Chinese companies
M&A activity between China and the UK has been a significant factor for a number of years, with 25 Chinese companies acquiring businesses in the UK between 2007 and 2013, including Weetabix and Sunseeker. However, organic growth is surpassing acquisition this year - just five of the companies in the tracker are the result of an acquisition.
The survey also shows a large proportion of the organic growth illustrated by the tracker is being delivered by Mainland China-based enterprises - of the organic growth companies in the 投英 Tou Ying 25, 12 are from Mainland China with just eight from Hong Kong. In all, 17 of the top 25 growth companies hail from the Mainland.
Over the last few years, Chinese overseas investment has been largely directed to the financial services and energy sectors. However, while these sectors are still well represented in the 投英 Tou Ying 25, there is a refreshingly broad range now - from manufacturing to real estate and technology and telecoms.
The tracker also reveals that more than half of the 25 companies have chosen to set up outside London, demonstrating the success of other UK regions in establishing themselves as alternative centres of expertise to attract inward investment.
Overall, the UK is now the fourth most popular destination for Chinese outward investment in 2012 - second only to the US among developed Western economies - and up from 21st in 2010.
Making an impact in China
But it's not just about attracting investment to the UK. British goods exports to China reached £10.5 billion in 2012, a 13% increase on the previous year, making it the UK's seventh largest export market. To take advantage of this opportunity, UK businesses need a strategy that focuses on the three Ps - the place of operation, the nature of the product and potential partners.
While it is China's 'first-tier' cities along the eastern coast that attract much attention, it is their 'second-tier', more westerly, counterparts that have become increasingly appealing for international businesses. Many of these 'second-tier' cities, such as Wuxi and Suzhou, are growth hotspots - achieving double digit growth and fast becoming wealthier than 'first-tier' equivalents such as Shanghai and Beijing.
As well as the draw that the potential local market provides, these hotspots offer many advantages over the more established centres. There is often less international and domestic competition and many of these 'second-tier' cities offer cheaper labour and land.
The most successful companies are typically those which build on their global brand but tailor their product to suit the particular market. For example, Oreo changed its biscuits to a square shape and reduced the sugar content to appeal to the Chinese market.
The Chinese frequently buy on price or brand, with the result that Western companies tend to be most successful with high-end or low-end products. For example, in the food industry the UK is leading exporter of both malt whiskies and pig offal.
An important decision is whether to go it alone - setting up wholly-owned enterprise - or whether to partner with an existing business.
A partnership can be the quickest route to market and provides valuable expertise in local business practises. It is also compulsory in some sectors such as property. Joint ventures are starting to become more common again, but care needs to be taken to protect intellectual property. Equity in joint ventures also needs to be structured carefully at the outset as there is little flexibility.
In certain sectors, such as healthcare and education, the most important potential partner may be the Chinese government and, whatever sector a business operates in, government support is useful.
The China-Britain Business Council, a UK-government sponsored organisation for helping businesses in China, provides useful information on potential partners.
Open for business
It's clear to see China contributes a huge amount to the UK economy and offers great opportunities for UK businesses. Successful companies in China balance optimism with thorough preparation and careful execution - putting in place a China-specific strategy that navigates the complexities of China. For those that do, the rewards can be significant.