Red tape and regulation is preventing the Chinese automotive industry getting out of first gear, and trading there remains a big risk for West Midlands businesses.
That was the conclusion of a new report by Birmingham-based analysts who say that bureaucracy is the biggest stumbling block for companies hoping to do business in China.
Ernst & Young, which produced the report, said the difficulties were underlined last year with MG Rover's attempt to clinch a joint venture deal with Shanghai Automotive.
Prolonged uncertainty over Nanjing Automotive's plans for resuming manufacturing at Longbridge following its acquisition of MGR's assets had added to the sense of unease.
The report, which analyses China's Automotive Industry Policy (AIP), suggests, however, that trying to gauge the future direction of the country's automotive market is just as complicated.
The report concludes that the sector has massive potential, but opportunities for foreign investors are being hampered by constant legislative changes.
Kevin Honey, E&Y's Birmingham-based automotive specialist, said: "Some of the challenges for companies looking to invest in China come from the fact that the AIP's 13 chapters, 677 articles and two appendices are a n overarching policy framework.
"It is up to a number of government departments to create sustainable regulations and ensure implementation.
"Such bureaucracy, red tape and excessive legislation give companies in the West Midlands even contemplating a move into China a major headache - it's a constantly moving feast."
Market volatility and uncertainty is being caused by "seemingly mercurial" s hifts in taxation and legislation aimed at encouraging consumers to buy smaller vehicles.
This in turn makes enter-ing the market and setting up joint ventures or trading agreements even more challenging.
On the other hand, ambitious growth ambitions for the economic development of rural areas outlined in China's new five year-plan would stimulate demand for trucks and affordable cars.
Despite the E&Y report, West Midland companies should not be deterred from doing business with China, Birmingham-based industry body, the Society of Motor Manufacturers and Traders' Industry Forum, said.
"It is true that anyone doing business in China will have bureaucratic hurdles to clear, but that is so for companies coming to the UK or mainland Europe," an Industry Forum spokesman said. "The Chinese market is potentially huge."