Last week's Scottish Parliament report into the fitness and progress of the Scottish Government's latest China Plan achieved that ultimate Chinese ideal: harmony.

The examination by the European and External Affairs Committee into Scottish business engagement with the world's second-largest economy featured an exceptionally credible cast of witnesses.

Many of them were "old China hands" and some – such as Scottish Financial Enterprise's Owen Kelly or the China-Britain Business Council's Edinburgh representative, James Brodie – are Mandarin speakers. Skilfully synthesising their views, the committee's clerks and convener, Christina McKelvie MSP, have produced a report that is as authoritative as it is balanced.

As well as cheerleaders for progress so far of Scotland's engagement with the Middle Kingdom, the committee included the views of these who say it was misguided or insufficiently focused, or that there had been insufficient progress.

Scotland still sells less than £500 million worth of goods – less than 0.05% of our GDP – to China, prompting questions of whether more bang for the public-sector buck might be gained in less glamorous, closer-to-home markets. As Denis Taylor, a former SDI executive and a Sinosceptic witness, noted in his evidence, China had fluctuated between 11th and 19th place in Scotland's export destination charts between 2002-11, a less than stellar performance.

Although this weekend's report does not avoid fortune-cookie statements of the obvious, and obsessive harping on about "refreshed strategies", the inclusion of the views of those doubters gave a bit of extra edge to the reasonable "could do better" with which the report concluded.

The main thrust? That not enough Scottish firms know that there is a China Plan at all, let alone know what that means to them and how they can contribute to it, so more should be done to shout about it.

What also shines through is the committee's clear determination to keep tabs on progress towards its targets: a 50% increase in direct exports to China by 2017 and a doubling of major Chinese investors in Scotland by 2017. But as the Sunday Herald reported back in January, the growth figures have been underwhelming so far.

On balance, the report seems to reject the view that Scotland should cease to chase the dragon. In one resonant passage, James Anderson, the investment brain behind Baillie Gifford's iconic £2.2 billion Scottish Mortgage Investment Trust, compared China to the America of the early 20th century, saying: "To neglect opportunities there would put Scotland at a serious disadvantage."

What also comes through the report is the dependence on the quality of the support structure on the ground in China and the importance of SMEs sharing their experiences of China's distinctive business culture, to ensure a "soft landing" for new entrants. SDI, the report said, could do more to broker this, and to make its own services better known.

There was also a frank assessment of how China skews the playing field in favour of its own companies, for example giving its textile manufacturers a 16% tax rebate allowing them to undercut Scottish competitors, and how it slaps a 10% import tax on Scottish salmon, while competitors such as New Zealand (0%) and Chile (3%) enjoy more favourable treatment.

Mixing sweet and sour, the committee's determination to stay on the case with annual reviews of the China Plan's progress shows a welcome desire to lift the Scottish Parliament's eyes beyond domestic issues. Here are some of the report's standout themes:


Given the close correlation between direct air links and volume of trade, it seems that the single measure that would do most to transform the progress of the China Plan would be the establishment of flights between Scotland and China's thriving cities, and talks continue about making this happen. David Middleton, chief executive of Transport Scotland, flew to the Chinese capital last month to meet with the Civil Aviation Authority of China, and Transport Scotland's spokesman has praised Beijing's "commitment to our common objective of establishing a link and their help in facilitating engagement with Chinese airlines".

The spokesman said: "We are continuing to engage with Air China, China Eastern, China Southern and Hainan Airlines on factors which influence airline decision-making processes and determine the timing of the start-up of any new service, including aircraft availability and deliveries, airport capacity and also potential incentives which could be offered."

The lack of a direct air link so far should be seen in the context of the UK's poor connectivity with China relative to the size of our economy and population, and also relative to our European competitors. According to data from IATA, the international air transport association, in 2012 there were 1817 direct links between one UK city (London, Heathrow and Gatwick) and three Chinese cities (Beijing, Shanghai and Guangzhou).

That is fewer than half of the 3897 flights between four German cities (Berlin, Frankfurt, Munich and Dusseldorf) and five multi-million-inhabitant Chinese cities (Beijing, Shanghai, Guangzhou, Nanjing and Shenyang). Finland, with a population equivalent to Scotland, has an impressive 837 flights a year from Helsinki to Beijing, Shanghai and Chongqing.

A plan to open a Scottish route to Edinburgh or Glasgow – the former was named as Scottish airport of the year last week – has been under discussion for years, but despite the enthusiasm of the Scottish airports – notably Edinburgh owner Global Infrastructure Partners – and despite good intentions, there appears to be little chance of it happening soon.

The reasons for opening (and closing) new routes involve an impenetrable matrix of demand considerations, airlines' commercial priorities, the level of airport passenger duty, physical infrastructure capacity, aircraft availability, and international and national regulatory hurdles surrounding public support,

"By tracking forward travel, we have an indication of how to prioritise the introduction of unserved routes," an Edinburgh Airport spokesman told the Sunday Herald. "China and Hong Kong are in the top 10; a lot of people are going there, so it's kind of a priority. We think there is the start of a case that's getting stronger all the time.

"It's something that we have talked about quite a bit with the Scottish Government, and we have tried to ensure we are exploring every opportunity. We see it as part of our job to make sure that Scotland's passengers get the links they require and we talk to airlines all the time about the advantages of flying to Edinburgh."

But he also noted that Chinese airlines and officials need to be convinced that Scotland is "in their top 10" as there will be many other destinations around the world where it is easier or more profitable for them to fly to. In the meantime, organisations such as the China-Britain Business Council, VisitScotland, Scottish Development International and CBI Scotland continue to lobby for a link that would help put China at the forefront of Scottish business thinking.


The report contains notably faint praise, and some criticism, of Scotland's overseas trade body, Scottish Development International ("not surprising, given the unsubstantiated assertions in their evidence," said one fellow witness), which is exhorted to do more to support business-to-business networking, and more to raise awareness of the China Plan in general.

Companies including Elimpus, Todd & Duncan and the Scottish Salmon Company all suggested that "more direct input from SDI and ongoing support" would be welcome. Electrical monitoring company Elimpus called on SDI and Scottish Enterprise to "encourage and actively facilitate networks and relationships in Scotland of like-minded, similar SME companies so that they can collectively make a stronger showing in China". Meanwhile, the Federation of Small Businesses found that knowledge of SDI's SME-facing Smart Exporter scheme was "very limited", with only 23% name recognition in a survey. There was also only a perfunctory mention of the GlobalScot network.

Although the report does not say that SDI should leverage more fully the resources of the China-Britain Business Council (CBBC) and UK Trade & Investment (UKTI) – an omission that to some reflects the desire to downplay Scotland's interaction with the UK-wide agencies – relations, in fact, between the various agencies have been improving.

Next month UKTI, CBBC and SDI are cashing in on a "Coronation Festival" event at Buckingham Palace for royal warrant holders to divert northwards a group of 28 Chinese companies, including distributors, mall owners and agents, who could offer UK luxury brands an entry into the Chinese luxury brand market. An event at Hopetoun House is intended to interest them in Scottish fashion brands, jewellery, gifts and other consumer delights.

Anne MacColl, SDI chief executive, said in reply to the report: "We have more than doubled the number of companies we've assisted to trade in China in recent years and exports to the region grew by 21% in 2012. Scottish businesses have ranked China first as a future market and from this it is clear there's appetite among Scottish companies to trade with China."


'The committee would welcome more opportunities to learn Mandarin or Cantonese at all stages of education." Although the promotion of Chinese language skills is part of the China Plan that was not directly examined by this economy-focused enquiry, the dream of producing a generation of Chinese-speaking Scots is a recurring fantasy of Scotland's mostly monoglot political class, overseers of an education system that fails annually to produce more than a small cadre of competent speakers of far simpler languages than Mandarin or Cantonese.

Although seeking competitive advantage by dispatching Scots competent in commercial Chinese would certainly be a wonderful distinction for Scotland, its inclusion in the report suggests is a rare descent into pious hopes, losing focus on what is realistically achievable with Scotland's resources, However as James Brodie of the CBBC points out, such a view is "defeatist" and a well-funded effort by Scottish educationalists to make Chinese language the unique selling point of Scottish schools would open many doors in China.