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August 7, 2009

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IT's vital as catalyst to Shanghai's vision

SHANGHAI is pouring billions of yuan to upgrade its information technology infrastructure and related services to provide the most advanced pillar of support for the city's transformation into an international financial and shipping center.

Investment in IT pervades every sector of the economy, delivering faster broadband access, next-generation mobile communications, energy-efficient data centers, expanded international Internet bandwidth and supply chain management systems.

"Shanghai won't become an international financial and shipping center without IT," said Sha Hailin, deputy secretary general of the Shanghai municipal government and chairman of the Municipal Commission of Commerce.

The central government in March issued a guideline giving the official go-ahead for the city to develop itself into the New York or London of the East.

To achieve that goal, Shanghai needs an IT system that can manage everything from data to products, according to Sha.

For financial institutions, IT will help them manage huge-capacity data to improve work efficiency and manage risk. For shipping firms, IT is also necessary to ensure reliable supply chains.

Telecommunications firms have already invested huge sums in Shanghai to construct and upgrade infrastructure and provide customers better services.

China Mobile, China Telecom and China Unicom have sealed contracts with the Shanghai government to invest in the city.

China Mobile is committed to investing 31 billion yuan (US$4.56 billion) within three years to support the city's goal to become an international financial center, according to Zheng Jie, general manager of China Mobile's Shanghai branch.

"China Mobile will contribute to the strategic development and transformation," Zheng said.

Shanghai Mobile will provide mobile and fixed telecommunications for more than 800 financial institutions in the city, including mobile and online payment services.

China Telecom, which will invest 26 billion yuan within two years, said it aims to establish the city as an "Asian telecommunications hub."

By 2012, Shanghai Telecom plans to speed up residential broadband access tenfold to 20 megabits per second. It will also expand overseas Internet bandwidth through the undersea cable.

Shanghai Telecom has also agreed to provide Internet upgrading and Internet data center services to industry areas like Zhangjiang High-Tech Industrial Park.

Building on 3G

All the three telcos are building third generation, or 3G, mobile communications networks in the city. Based on 3G, users can access broadband Internet through mobile phones or laptops.

Software vendors also stand to benefit as Chinese banks upgrade their information technology systems to catch up with overseas rivals.

"Relatively speaking, they (domestic) banks have more capital and the necessity to spend on IT (compared with overseas counterparts)," said Timothy Cheung, SAP China's managing director.

SAP AG, Europe's biggest software vendor, said it would launch a new core banking system in China after determining "great demand here," Cheung said during an interview in Shanghai.

Double digit rates

The core banking system will help banks better manage data, reshape work processes and manage risk, experts said.

The Bank of China and other major domestic banks are upgrading their core banking systems to meet the needs of an international financial center.

Demand from financial institutions in China for messaging services will continue to expand "at double digit" rates annually, despite an economic slowdown elsewhere, said the Society for Worldwide Interbank Financial Telecommunication, a provider of standardized financial message-exchange services to global firms.

Booming cross-border trade, investment and financial derivative product activities will boost demand for messaging services, according to SWIFT.

There are plans to launch new products, which may include margin trading and stock futures, as part of market reforms in Shanghai. The more complicated trading devices will place additional demand on financial IT systems.

The shipping industry is also heavily dependent on IT because it's a data- and product-intensive industry.

"Shipping and IT are brother industries and they have to develop in tandem," said Long Haiquan, a researcher at the Graduate University of Chinese Academy of Sciences.

All global shipping hubs, like Singapore and Hong Kong, have high-standard IT infrastructure, Long said. He also pointed out that Shanghai also needs to invest more heavily in advanced electronics systems for its harbor and airports.

The city will also need more supply-chain experts if it aims to be a world class port.

Cisco Systems Inc has linked up with Fudan and Stanford universities to jointly establish the CFS Supply Chain Leadership Institute in Shanghai, which will help senior executives upgrade their logistics expertise.



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