Zhu. Rongji's decision to make Britain his first foreign destination as China's premier signalled a marked improvement in relations between the two countries. His attendance at the Asia-Europe Meeting last month represented the highest level Chinese visit to the UK for more than a decade. Later this year, the British prime minister Tony Blair and deputy prime minister John Prescott will make visits to China where the emphasis will be on co-operation rather than confrontation.
The improved spirit was facilitated by the EU's decision not to sponsor a resolution criticising Beijing's human rights record at the recent UN Human Rights Commission held in Geneva. The Hong Kong hangover has also helped to clear the air. Over the past decade, disputes leading up to the transfer of Hong Kong's sovereignty created political tensions which have spilled over to affect the overall business relationship.
Now that the transfer has passed smoothly, a flurry of initiatives have emerged aimed at helping promote understanding and interchange between Britain and China. Several of these trade, educational and cultural events taking place this year fall under the umbrella of a campaign known as 'Britain in China', which is being co-ordinated by several British organisations. Central themesinclude demonstrating Britain's competence in high-technology and strengthening areas of bilateral co-operation.
One of the most interesting of the new initiatives involves British companies assisting in the reform process of Chinese state enterprises. The China-Britain Industrial Consortium was established in May last year and the concept is attracting significant interest in both countries, despite the onset of the Asian crisis and the slowing economic growth rate in China.
Helping the reform process
The idea is for British companies to help improve the management performance of selected Chinese state organisations. In return, the British companies hope for some future commercial benefit arising from the business relationships which are formed. The unstated message from the Chinese government which is backing this initiative seems to be that foreign companies need to give something if they are to expect a return.
What makes the initiative so attractive is the potential to deliver real benefits to both sides. Chinese state organisations are embarking on a radical restructuring without a large pool of talented senior managers knowledgeable about modern business practices. This programme,while limited in scope, could make a difference if the Chinese participants are of the right calibre and seniority.
For the British side, the scheme presents a structured and cost effective means of demonstrating commitment to the reform process taking place in China. In addition, companies can form an attachment to an organisation of their choice ?the scheme does not encourage companies to select existing clients ?and by doing so promote an understanding about that company's capabilities.
The initiative has the support of Britain's Department of Trade and Indus-try, which is putting up some of the funds, and China's State Economic and Trade Commission (SETC), one of the new super-ministries created by the recent government reshuffle. The involvement of this influential Chinese ministry is seen as crucial to the success of this scheme, which is scheduled to last for an initial period of five years. The initiative is headed in the UK by Mr Roger Caesley, on secondment from British Aerospace.
Currently, 17 leading UK companies make up the consortium, drawn from a range of industries from the manufacturing, utilities and service sectors.
The scheme has five elements, with the overall intention being to improve managerial structures and decision-making rather than just passing on technical or industrial knowledge. The first element is an annual management seminar held in China involving up to 100 Chinese participants and on a subject deemed of interest to the local delegates who are selected by the SETC.
The inaugural topic was the experience of moving from public to private ownership. This year's seminar, to be held next month, will be on 'strategic management', covering issues such as mergers, acquisitions and corporate restructuring. Senior speakers from Britain will explain the procedures which led to strategic decisions being made. For example, a Rolls-Royce case study will divulge why it decided to team up with BMW in a certain range of engines. For its part, the Chinese side will present papers and film the event to use later as an instructional video.
The senior management industrial strategy programme is a three-week event held every year in the UK. The aim is to provide participants with access to a wide range of industrial and government experts in Britain. Around 30 senior managers from the state sector are expected in 1998, again selected by SETC, to spend an intensive three weeks getting to know more about the British business experience. The key, according to Caesley, is getting the right level of people; hopes that the 1998 delegation will include a vice-minister of China should help to ensure a high calibre later this year.
Week one, run b- Cranfield School of Management, involves learning about the theories and practical examples of modern business. For example, the role and responsibilities of shareholders and non-executive directors are explained, with company representatives talking about their own experiences. Week two is an introduction to the workings of the government and financial sector. Britain's pioneering role in privatisation is of direct relevance to the delegates, even if the term is taboo in China. Week three involves delegates visiting companies of relevance to their sector ?for example, power sector managers might visit Powergen and National Power.
The visit does include the usual tourist outings, but Caesley is anxious to stress that this is not a `jolly'. Such an attitude is in keeping with the example of prudence and frugality which China's new premier is so keen to set to state officials and managers.
These first two elements are funded by an annual subscription fee of around US$9,000 paid by each member company. The Chinese side pays the air fares and some of the accommodation costs towards the management programme.
Learning about each other
The other three elements are more focused and are largely funded by those UK organisations which choose to participate. The first element is an MBA scholarship programme whereby British. companies request the SETC to find 'a suitable candidate from a specific Chinese organisation to study full-time for one- year. The SETC then. puts forward .'a candidate who is assessed for academic competence and under-standing of the English language.
The selection process is rigorous, so as to ensure that only the best cand idates get places. It also has to be seen to be competitive in order to qualify for a grant from Britain's Foreign and Commonwealth Office which, along with Cranfield, is partly funding the scholarships. From September this year, six young managers will study for an MBA at Cranfield. Two state banks employees have been put for-ward. by' Standard Chartered, and. single candidates from other organisa-tions have been sponsored by Lucas Aerospace, Rolls-Royce, National Power and GKN.
The placement scheme works on a similar principle, involving the selection of young middle managers and specialists spending around three months with the host company. There is no limit to the number of candidates that a company can put forward.
The final element is an on-site consultancy programme in China. Here, two or three executives fly out from the UK to spend about a week with a selected state enterprise to advise on various manufacturing topics. For example, British Steel has addressed the subject of stainless steel manufacture to Maanshan Iron & Steel while British Aerospace chose the topic of project management in its discussions with the Xian aircraft plant.
The emphasis is on both companies learning about the other's strengths and capabilities ?it is not about instruction. This is obviously a useful exercise if the two companies are considering some kind of future business relationship.
Spreading the benefits
In terms of educational and training resources, Caesley admits that no country can begin to match the US , especially when it comes to MBA programmes. In excess of 120,000 Chinese students and scholars have studied on American campuses since 1978 and the majority are still there.
Instead, the China-Britain Industrial Consortium sets out to be a well targeted and high quality scheme in which all the participants can quantify the benefits of taking part. The number of companies involved and the amount of money spent at this stage are perhaps less important than the fact that this is an example of positive and practical partnership between two countries which have only just emerged from a period of prolonged political confrontation.
Caesley is aware of the danger that a rapid expansion might lead to an erosion of quality. However, more UK participants are being sought, including smaller companies. Large groups tend to be more prepared to take a long-term view of China and can more easily afford the annual fee and additional costs in terms of time and money. "I am trying to find a mechanism by which small and medium-sized companies can also participate, says Caesley, "possibly by using trade associations such as the Society of Motor Manufacturers."