Birmingham manufacturer BSA Machine Tools has taken the long approach to doing business in China.
The Kitts Green firm is now reaping the benefits of a co-production deal which dates back to 1995.
BSA, which makes CNC turning centres and automatic lathes, has signed an agreement with Chang Cheng – which means Great Wall. The Chinese firm now produces many of the components for BSA in the Far East, while presenting a launch pad into the burgeoning Chinese market.
Steve Brittan, managing director of BSA, said the arrangement meant his firm enjoyed the benefit of cheaper Chinese production while ensuring product quality and design, was retained in the UK.
Installation and customer support is also kept in the Midlands. He said: "China presents a huge problem and a big opportunity. It is is a big market, but there is also very tough competition.
"We got in touch with Chang Cheng after going on a trade mission and meeting various companies. We did some research and decided to work with them.
"They were situated to the West, while everyone was going for firms based on the eastern seaboard. It has worked out pretty well. It gives us a foothold in the market place, and they get the benefit of technology.
"We keep the engineering, the customer support and the final assembly over here. This means the customer gets a good quality but competitively priced product.
"In China everyone wants widgets now. and it is my biggest market now. I go over there two or three times per year."
Mr Brittan said his firm had followed a long-term approach, which began with the Chinese firm initially making large castings.
"First, they made the big expensive lumps. Then we moved towards them making the mechanical frames for the machines using the British components.
"Eventually we moved towards building complete machines for the Chinese markets with Chinese and then finally an international quality machine."
At present some of machines, while others are made in the UK.
Mr Brittan said the joint working arrangement worked better than joint ventures, where "extra boards are set up, but nothing ever happens. From this link up both sides benefited almost straight away."
While BSA, which employs 30 people in Kitts Green, around 800 work in Ningxi Province for Chang Cheng producing machines which are used in the aerospace, defence, automotive and engineering industries.
Last year BSA, which has sales of around #10 million, clinched orders worth $3.5 million in the country and $2 million in Brazil – helped by the improved competitiveness its Chinese production affords it.
"Lots of people go to China, but you have to take a long term approach. A lot of Chinese companies do not have the quality or delivery that is good enough to sell in the West.
"I shall be looking to come back with a few more orders when I come back," added Mr Brittan. "It is quite easy to stay in touch via the internet with what is happening in China."
He added: "It is far, far cheaper to make things in China. Inland labour rates are around $450 per year.
"Some people have moved production to eastern Europe, but it will only be a short time before the costs there catch up with western Europe.
"China will catch up, but that is 30 years away."
The link up could also have important spin-offs for other Midland manufacturers, added Mr Brittan.
"We do not manufacture all the parts on site. Some small components for other machines we source from other firms around the area.
"This deal has helped us to survive in a very tough manufacturing sector. If you want to compete as a manufacturer in the UK, you have to look at doing different things.
"By relying on traditional manufacturing you cannot compete. This is a co-production agreement. They get business and technology and we get a low-cost product."