The Chinese language symbol that means “China” is a rectangle with a vertical line through the middle, apparently signifying China’s ancient belief that the country lies at the centre of the world.

In the IT industry, however, China is approaching from the margins. It has watched the dramatic impact of Indian companies on the global technology sector, and before long IT managers will be dealing with Chinese suppliers as they target the UK, Europe and the US to achieve their aim of becoming major world players. So what can you expect?

India achieved its success through a combination of English language skills, a highly-educated and enthusiastic workforce and an ability to rapidly learn how to deliver quality IT services at low cost. The challenges for China are quite different.

“China’s economy continues to grow rapidly, fuelled by huge domestic demand and the Chinese government’s consistent application of its ‘reform and open’ policy, which has affected the global economy. This economic growth has driven revenue growth in the information and communication technology market,” says Tina Tang, senior research analyst at Gartner.

“The market, however, has several key inhibitors, and Chinese service providers in general lack the experience and range of Western companies.”

One of the firms heading the drive into the Western market is Huawei, a manufacturer of telecommunications and networking equipment with customers such as BT (see case study), Vodafone and Telefonica, the owner of O2.

The company provides an example of the potential of Chinese suppliers, as well as some of the hurdles they will have to overcome.

“China’s advantage lies in manufacturing and innovation,” says Huawei’s chief marketing officer Xu Zhijun.

“China’s successes in manufacturing are unparalleled and highly recognised throughout the world. China’s innovation is not necessarily as widely accepted or recognised throughout the world, but it exists. It is the eastern Asian people who use their right brain most frequently. The right side of the brain is the source of innovation.”

Huawei invests 10 per cent of its revenue in research and development (R &D) ­ a comparable proportion to Western IT providers. But lower staff costs make such spending levels deliver more than the firm’s rivals, says Xu.

“Our revenue this year will be about $11bn (£5.3bn), so our R&D investment will be about $1bn (£483m). In absolute amounts we are not investing as much as other big players, but R&D expense lies mainly in people costs,’ he says.

“If you look at our labour costs in R&D, China’s average is only about one-sixth that of the US and Europe. So this says Huawei’s $1bn (£480m) investment in R&D will amount to $4bn (£1.93bn) or even $5bn (£2.42bn) in the US or EU.”

To back up this claim, Huawei can point to a remarkable statistic: 48 per cent of its 62,000 employees work in R&D ­ that’s more than 30,000 people, a workforce percentage that no Western firm could possibly match.

But one of China’s biggest challenges is in the perceptions ­ and in many cases the misconceptions ­ of the West. Mention China and the response from many in business will include factors such as copyright violations, intellectual property piracy, cheap goods and even allegations of human rights violations. The recent example of a major product recall of Chinese-made Mattel toys on safety grounds did the image of the country no favours.

“Back in 1998, China was not perceived as a high-tech country,” says Xu. “It was perceived as a country full of fake products and other low-quality products such as shoes and garments. At that time, when we made a presentation to customers and said these are our own products, they did not believe us. Against this backdrop, Huawei has to make maybe hundreds or even thousands of times the efforts and address hundreds of times the challenges compared with a US or European company.”

Xu says such unique challenges have had to underpin Huawei’s approach to the global market: “The best way for us is to identify maybe a smaller opportunity to carry out a project in collaboration with a customer to really show who we are and whether that might match with the customer’s perception,” he says.

“But China is a big country and has a lot of businesses, so it is not realistic to expect all those companies to address these issues in a short time. As a Chinese company, we can build a corporate image that is totally different to what people have perceived before.”

Gartner’s Tang says a lack of Western business acumen is a big inhibitor for a lot of Chinese companies.

“Government support and swift economic growth are driving the IT services market, but shortcomings in education and less-sophisticated business practices are holding it back,” she says.

“English proficiency is not as good as in India, Hong Kong and Singapore. English skills are greatly needed to improve the Chinese market. The problem is not simply rote learning of the language, but quality ­ especially using and understanding nuanced language in sophisticated business discussions.”

Huawei, for example, recognised such shortcomings and has invested heavily in training in Western practices, bringing in consulting firms such as IBM for product development and Hay Group for human resources, to help improve its processes.

“Our solution is to introduce professional Western management expertise and practices, and combine that with the wisdom of our Oriental culture,” says Xu.

Business practices are one thing; business culture is another barrier altogether. Geoff Mills is a director of SIP Group, a company that specialises in advising Western firms wishing to do business in China. He says there are some fundamental differences in attitude that pervade dealings with Chinese companies.

“The Chinese are not brought up with concepts of right and wrong or fairness or level playing fields. Instead they are brought up on Sun Tzu’s Art of War, to win,” says Mills.

“We are brought up to think there are some fundamental ground rules that people follow that are not the law but are a higher level of operating than the law, and people abide by them because it is considered fair and reasonable to do so. But the Chinese are brought up from a fairly early age to believe that the only thing that is important is to win.”

Mills says that for the West to profitably work with, and compete against, Chinese companies, we need to do more to understand them.

“China has placed a huge emphasis on educating its people to understand our culture ­ the Chinese are learning English, but you can hardly find an English school teaching Chinese. They are ready to go at our soft underbelly, and they know what it is because they are taught about our culture as well as their own,” he says.

“They take business much more seriously than we do; their children do not learn media studies and the fluffy things we do, so they are more focused. They are a tough bunch to do business with.”