The SNP administration wants to take advantage of rapid growth in China and is working to foster closer ties in business, tourism and education.
But an inquiry criticised the role of Scottish International Development (SDI) - which has a "major role" in delivering the Government's "China plan".
Holyrood's European and External Relations Committee found that Scotland has not established "visibility" in China and colleges are not recognised there.
Politicians also raised concerns over China's human rights record.
The report described problems in selling the "concept of Scotland" to China and added: "The committee is concerned about the failings identified by some witnesses in the performance of the SDI."
Further work is needed by the agency and tourism body VisitScotland to turn the situation around, the report said.
The finding was based in part on evidence to the inquiry from Standard Life.
At a committee hearing in June, Lynn Lau, of the Edinburgh firm, said agencies in London are more effective.
She added: "Some of them involved civil servants, as SDI does, but they know what they are doing."
MSPs heard that SDI "does not understand what businesses want" and does not "cultivate relationships".
The committee called for better support for business, improved international profile for colleges, direct flights and more support for tourism.
MSPs criticised a lack of financial information from the Government to back up its objectives.
On human rights, the report stated: "The committee firmly believes that there is an obligation on politicians and indeed all those who do business with China to continue to raise the issue of the Chinese Government's record on human rights."
The report urged ministers to promote human rights issues "at every available opportunity".
Committee convener Irene Oldfather said: "The committee welcomes the Scottish Government's commitment to engage more with China, particularly as the country develops a strong economy and moves into a prominent global position.
"However, more work is required to grow new long-term links and to strengthen existing ones, particularly in areas such as business, education and tourism."
The Government's China plan was published in May 2008, building on work by the previous Labour-Liberal Democrat coalition.
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