If all the shoes in Britain were suddenly to walk back to their point of production, a vast line of brogues, trainers, wellies and winkle-pickers would stroll thousands of miles across the Eurasian landmass before finally putting their feet up on a dusty plain in southern China.

Hard on their heels would come most of Britain's socks and stockings, as well as millions of toys and billions of sweets. The overwhelming majority of microwave ovens, kettles, fridges and household appliances bought in the last few years would follow the same trail.

Increasingly so would car components, biotech products and other high-value goods. Most of these items would be heading for the Pearl River Delta of Guangdong province - the workshop of the world and the place where millions of low-wage Chinese peasants are more and more likely to be doing the jobs once performed in Britain and other post-industrial nations.

Among the latest to make the long march east is Dr Martens. As of this year, the iconic British boots are no longer being made by the firm's factory in Northampton, which has closed with the loss of 1,100 employees. Instead, they are produced alongside numerous other famous brands in one of Guangdong's hangar-sized production plants, where tens of thousands of workers earn just ￡70 a month plus bed and board - less than one tenth of the wage of the British employees they have replaced.

The factory is run by Pou Chan, the world's biggest shoemaker. Few Britons are likely to have heard of this Taiwanese company, but the chances are that many wear its products, which include Reebok, Adidas, Nike, Timberland, Puma and Hush Puppy. This year, the company expects its 279 production lines to turn out one in every seven shoes on the planet.

The footwear industry is by no means the only one to be lured from its traditional British base. In June, Stoke lost two of its best-known potteries and more than 1,000 jobs when Waterford-Wedgwood shifted production of its Johnson Brothers earthenware products to the far east.

Last November, Candy shut its sweet-making plant in the Wirral, laying off 200 workers, so that it could take advantage of cheaper labour in China and other countries. In recent years, similar moves have been made by the food mixer maker, Kenwood Appliances, the pram manufacturer Silver Cross and other firms.

As far as jobs are concerned, such high-profile announcements are only the tip of the iceberg. Many other companies are quietly stepping up their purchases of increasingly high-quality Chinese-made goods, which they incorporate into their own brands. By some estimates, 20% of every Rover car is now made in China, where MG and Bentley are also purchasing or making parts. At the other end of the scale, the dried fruit in Alpen cereal is more likely to be processed in China now that its supplier - Chaucer Foods - has set up a base there.

Retailers cannot afford to ignore the trend. B&Q sources US$1bn (￡600m) worth of products from China for its stores in Europe. Other high street names are more secretive about the origins of their own-brand goods, but few clothes retailers can have avoided Zhuji, the world's biggest sockmaker, which claims to make 8bn pairs each year, or the electronics firms in Shunde, Guangdong, which make 90% of the world's kettles and 70% of the microwaves. Such figures have contributed significantly to Britain's imports from China which grew 16% last year to ￡6.7bn.

The employment impact of the China phenomenon also has to be assessed in terms of lost investment. During the 1980s and 90s, foreign electronics makers like Samsung and Matsushita helped to prop up Britain's economy by spending heavily on new factories in depressed areas. Now many of those UK plants are being closed or restructured as their former owners focus their production bases near Beijing, Shanghai and Guangzhou.

Cheap labour

The benefits of a cheap, inexhaustible workforce are attracting foreign businesses in droves. For the first time this year, China is expected to overtake the United States as the biggest destination for global foreign investment - more of which comes from Britain than anywhere else in Europe. According to the Ministry of Commerce in Beijing, British firms have spent US$18.5b on more than 3,000 projects in China. In the first five months of the year, the pace of investment increased by 29% compared with the same period in 2002.

This is great news for China, transforming one of the world's poorest nations into a vibrant economy that is growing more than 8% a year. But in the UK, each announcement of a factory closure raises fears that the world's most populous nation is sucking jobs - as well as investment - from Britain.

Diplomats, businessmen and analysts argue there is little alternative. With labour costs five to 20 times lower than the UK, generous tax incentives from the government and an increasingly skilled workforce, China's competitive advantages leave many British firms with a stark choice: go east or go bust.

"China is moving to become a global manufacturing hub. UK firms cannot ignore that," said Steve Buckley, head of the trade and investment section of the British embassy in Beijing. "I would rather see British companies stay in business with fewer people than go out of business completely and have to lay off their entire workforce."

If anything, many UK policymakers feel the move east needs to be accelerated. Although Britain is the main European investor in China, the government is concerned that most of that money has come from a handful of huge firms, such as Shell, BP and Vodafone, while small and medium-sized British manufacturers have been slower than their rivals on the continent or in Japan to move to China. This year, the embassy has organised 30 trade missions and 50 exhibitions to try to catch up and correct the outdated UK image of China.

The fact that Britain lost most of its manufacturing during the 80s may have shielded the UK from the worst implications of China's expansion, while blinding companies about the future risks and opportunities. In retailing, financial services and biotechnology, however, further shifts are likely.

Opportunities

Some UK businesses see openings in the Chinese market as the country's middle class expands. B&Q will open its 15th store in Guangzhou this month. HSBC, which recently announced the loss of thousands of UK jobs, says it aims to increase its banking operations in China.

The company is already capitalising on the increasingly educated and internationalised workforce by expanding a new data-processing centre in Shanghai, its second in China.

"There is no shortage of college graduates with good English skills who are eager to work for a western company and learn its management style," said Dan Chang, the company's PR officer. "But this doesn't mean UK jobs will disappear. They will transfer to more advanced financial services like sales and marketing."

With unemployment in Britain still relatively low, pro-China advocates say the fears of job migration are overblown. "Although this is a very emotive issue, the UK workforce must adapt to the changed circumstances," says Chris Devonshire Ellis, a consultant for foreign companies looking to move into China. "There will be a minor impact on British jobs but nothing that won't be absorbed by the opportunities created elsewhere."

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