Phones in China
Using Chinese SIMs
Using Chinese telephony inside China is very cheap and a good option if you have several teams scattered throughout China.
A typical Chinese SIM costs about 60Y, which includes 20Y worth of credit. You might pay 12Y a month every month for 200 "free" text messages each month. After the first 200, it's some small amount like 0.05Y per text message. Calls are also pretty cheap (about 0.7Y a minute to another Chinese mobile phone). There are other deals offered by the phone company, but this works well if you're planning mainly on sending text messages.
Chinese SIMS all seem to have an expiry date as well as the credit balance. Buying a top up card extends the expiry date as well as adding to the balance - you'd need to bare this in mind if you wanted to use the same sim the next year. Some (like Duncan's) deduct a charge every month in exchange for cheaper calls etc - but not all of them.
China Telecom have MUCH better coverage than China Unicom (who have much cheaper calls)
Using Chinese SIMs in foreign phones
For foreign phones to work in China with a Chinese SIM card they must
Most US phones will not work in China. Most phone from the UK should work provided they're not locked to a specific network by the wankers who run the network.
You can have UK cell phones unlocked for a quid or two at lots of independent shops or market traders etc in Britain. I don't even think it's illegal. Phones in China are not sold locked so it would take a bit of explaining what you wanted to get it done in China. It is supposedly a trivial process though. For recent phones I think it is possible to work out a software unlocking code from the IMEI but don\'t know any more than that.
You can get decent cell phones with predictive text for about 500HKD in Sham Shui Po, Kowloon, Hong Kong.
International calls/texts with Chinese SIMS
Many Chinese SIMs are blocked from sending international calls and text messages. Most (maybe all?) Chinese phones (fixed, mobile and xiao ling tong) can receive international calls - although it can be expensive to do so in some cases.
You can make international telephone calls at IP rates from mobiles with IP cards or sometimes just by dialling a prefix.
Many rural landlines have international dialing blocked, so if you want to dial abroad (or call someone using a UK cell phone with a UK SIM ) you'll need to have an IP card. IP cards are available in most cities, but ones purchased in Yunnan may not work in Guangxi, etc.
To dial a non-local Chinese cell phone, put "0" before the number.