Manufacturing is far from dead, Martin Temple, director-general of industry lobby group, EEF, insisted last night.
And he said the sector was capable of taking advantage of the Chinese challenge, and prospering.
Speaking at the Stratford Manor Hotel, near Stratfordupon-Avon at the annual dinner of the British Stainless Steel Association, he warned it was "easy to lose sight of what a massive contribution manufacturing currently makes to the UK economy".
He went on: "It would probably surprise Joe Public that we still possess a good manufacturing base in the UK. Manufacturing output is nearly 35 per cent higher than 20 years ago."
But, since then the rest of the economy had grown even stronger hence the sector had diminished as an overall percentage of GDP and there were less people directly involved. However the figures took no account of the service sector growth around manufactured products.
Globally, demand for manufactured products was increasing at a fast rate, while world trade was rising.
However, in an EEF survey this year of 500 manufacturing firms, 42 per cent had outsourced all or part of their manufacturing overseas and a further 20 per cent were planning to do so in the next five years. Mr Temple noted: "A few years ago, I used to complain along with many others about the loss of jobs to Eastern Europe and the Far East. It is sad and I wish it were not so.
"But in recent years I have had to change my views and be realistic, not only about the threats but also the opportunities that these new economies present not as competitors but as markets and suppliers. Business cannot hide behind sentimental words: it must face the world as it really is, because it is changing, and changing fast. Business and manufacturing in particular must recognise and react to the key drivers if it is to survive."
China and India now encompassed a third of all humanity, and were a potential mass market, supplier and competitor.
And Mr Temple cautioned: "We should also not believe the dangerous myth that if we keep the high value products and make the low value products in China using cheaper labour, we will be OK. India and China are turning out many times more engineers and technologists than Europe. In ten years time China will be the workshop of the world and a technological superpower."
It now owned famous brands such as IBM personal computers, Alcatel mobile phones, RCA Televisions, and...Rover.
China already made half of the world's cameras, refrigerators and TV sets, 30 per cent of air conditioning and washing machines.
In Britain manufacturing was moving on, said Mr Temple.
Firms were switching from being wedded to traditional definitions of what constitutes a manufacturing company and a purely nationalistic attitude to location.
Manufacturers were changing how they added value. They expected to earn less from purely the product itself but gain more from activities linked to these products.
He said: "Increasingly, manufacturing covers the full cycle from research, through design, procurement, production, distribution and service - even retail - and a greater emphasis on recycling.
"Companies are redesigning themselves in different ways to face these global challenges, no longer can they just cut the price of the product they make to survive."
An example was Midlandsbased Rolls-Royce and the way it was also servicing the aero engines it made.
There were problems for British industry.
Decades of underinvestment was behind the UK's productivity gap.
UK companies invested just 2.1 per cent of turnover in R&D against an international average of 4.3 per cent.
The level of skills in the UK, especially technical skills, continued to hamper industry's efforts.
It was important that the Government developed welldesigned regulations that did not distract managers from improving their businesses.
Mr Temple said: "Initially, management must decide that they will have a core business here and by maximising the benefits and neutralising the disadvantages, exploit other global benefits or other people's weaknesses.
"We must also be careful that the control of core business, technology and manufacturing should not diminish. To lose too much of the manufacturing of the core products we sell to others, could lead to a terminal decline of the business or stealing of our technology."
Britain could benefit from the development of India and China.
He said: "Despite the challenges that we face I am still positive about our position because these competitors are also providing market growth on a massive scale and we remain one of the world's leading trading nations and can take this as an opportunity. Affluence is also raising the demand for prestige products, the sort of things we make today."
Saying environmental issues surrounding the growth of China and India would produce "quite new and lucrative markets for inventive and innovative companies", he continued: "An even more salutary point is that much of China's growth is based on import of materials for conversion into products for the West.
"Their own consumption is only just beginning.
"Additionally, business must also take into account location and logistics, so not everything can be made in China."