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A city with ambitions to be an international outsourcing center
By Qian Yanwen |
October 16, 2009, Friday
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WITH an increasing number of global corporations deciding to hand over aspects of their production processes to external companies, the local outsourcing industry is seeing rapid growth. The local government is encouraging this and its efforts are paying off, Qian Yanwen reports.
The outsourcing industry has been gaining momentum and with a first-class environment and rich pool of talent, Hangzhou is aiming to become an international center for outsourcing services.
From January to August this year, the outsourcing industry in Hangzhou has witnessed huge developments.
There has been a sharp growth in offshore outsourcing, with the total volume of contracts worth US$6,630 million, representing a revenue volume of US$5,030 million and a growth of 303.81 percent.
Up to August, the Ministry of Commerce had a list of 205 Hangzhou outsourcing corporations, an increase of 68 over the previous year. Of those, 46 had reached a revenue volume of more than US$1 million, and 10 of those had surpassed US$10 million.
"The global financial crisis has strengthened the awareness of cost-saving among companies, and the recession may temporarily curb the proceeds of that sector," said Lin Ge, vice director of the Hangzhou Foreign Trade and Economic Cooperation Bureau.
"But in the long run, the outsourcing industry will see a faster pace of growth. Compared with the traditional manufacturing industry, outsourcing does not produce pollution and can create plenty of jobs."
That is why Hangzhou has chosen to develop the outsourcing industry as a key business. It has allocated a huge amount of resources to help achieve its goal of being a world-famous center for financial service outsourcing, information technology outsourcing and business process outsourcing.
Outsourcing, which has grown into a trillion-dollar business over the past few years, subcontracts a certain process of production, such as designing, packaging or information management, to a third-party company. It can help to lower costs and raise efficiency in terms of either capital, labor, energy, land use or time.
Besides focusing on financial outsourcing services, the offshore sector keeps expanding its scope and depth by offering research and development in fields such as telecommunications, medicine and computer games. Over 60 percent of contracts have been signed with European and United States corporations.
The local authorities have also paid attention to improvements in the working environment and training.
Project 1210, which is promoting outsourcing zones, is currently under way. And 10,734 people have graduated from training sessions on outsourcing.
Crafted by the Ministry of Commerce and with more than US$1 billion in funding, China's outsourcing blueprint establishes several cities as bases. The aim is to attract 100 global corporate customers in these cities by 2013 and develop at least 1,000 outsourcing vendors to meet the needs of multinational companies.
Hangzhou is a frontrunner and seeks to differentiate itself among other cities by providing higher-end services.
In February, the State Council designated Hangzhou as one of 20 "China's outsourcing demonstration cities."
Other such centers are Dalian (Liaoning Province), Wuxi and Nanjing (Jiangsu Province), Wuhan (Hubei Province), Chengdu (Sichuan Province) and Jinan (Shandong Province).
Hangzhou was also listed among the 20 outsourcing talent training centers in April. Now the local government has begun to set new goals and taken practical measures for further development.
Leaders of concerned government departments have formed a team to hold meetings every quarter and solve problems in outsourcing industry.
Each year there will also be a citywide outsourcing conference for work distribution and a final assessment at the end of the year.
A three-year action plan to promote outsourcing in Hangzhou has been released and implemented. The government aims to build Hangzhou into an international financial and first-class domestic software outsourcing center. A series of favorable policies have therefore been put in place in terms of fund management and training institutions designation.
The city has also created platforms such as the International Outsourcing Forum, the China International Service Outsourcing Fair and the International Outsourcing Business Development Summit, held over the past two years.
Attendees at the summit included business leaders, industry experts and officials from America, Japan, Europe, India and China.
Enterprises in Hangzhou are encouraged to explore the international market by attending outsourcing conferences, holding forums, forming leagues and applying for international recognition. Some 10 scientific zones in Hangzhou have been set up as key outsourcing zones.
Innovations sparkle in talent training methods, shaping a distinctive Hangzhou style of training. And for the first time in China, the city has set up an institute to cultivate professionals for outsourcing.
The government also focuses on the promotion of the local outsourcing industry and cooperation with famous international service companies.
KPMG, the audit, tax and advisory company, released a book in Hangzhou entitled "A New Dawn - China's Emerging Role in Global Outsourcing." The book introduces the status quo of outsourcing in Hangzhou and local favorable policies.
Improving the outsourcing environment is also an emphasis for the local authorities. The city is also taking the lead in releasing several regulations for protecting intellectual property rights in the outsourcing industry.
The outsourcing industry has been gaining momentum and with a first-class environment and rich pool of talent, Hangzhou is aiming to become an international center for outsourcing services.
From January to August this year, the outsourcing industry in Hangzhou has witnessed huge developments.
There has been a sharp growth in offshore outsourcing, with the total volume of contracts worth US$6,630 million, representing a revenue volume of US$5,030 million and a growth of 303.81 percent.
Up to August, the Ministry of Commerce had a list of 205 Hangzhou outsourcing corporations, an increase of 68 over the previous year. Of those, 46 had reached a revenue volume of more than US$1 million, and 10 of those had surpassed US$10 million.
"The global financial crisis has strengthened the awareness of cost-saving among companies, and the recession may temporarily curb the proceeds of that sector," said Lin Ge, vice director of the Hangzhou Foreign Trade and Economic Cooperation Bureau.
"But in the long run, the outsourcing industry will see a faster pace of growth. Compared with the traditional manufacturing industry, outsourcing does not produce pollution and can create plenty of jobs."
That is why Hangzhou has chosen to develop the outsourcing industry as a key business. It has allocated a huge amount of resources to help achieve its goal of being a world-famous center for financial service outsourcing, information technology outsourcing and business process outsourcing.
Outsourcing, which has grown into a trillion-dollar business over the past few years, subcontracts a certain process of production, such as designing, packaging or information management, to a third-party company. It can help to lower costs and raise efficiency in terms of either capital, labor, energy, land use or time.
Besides focusing on financial outsourcing services, the offshore sector keeps expanding its scope and depth by offering research and development in fields such as telecommunications, medicine and computer games. Over 60 percent of contracts have been signed with European and United States corporations.
The local authorities have also paid attention to improvements in the working environment and training.
Project 1210, which is promoting outsourcing zones, is currently under way. And 10,734 people have graduated from training sessions on outsourcing.
Crafted by the Ministry of Commerce and with more than US$1 billion in funding, China's outsourcing blueprint establishes several cities as bases. The aim is to attract 100 global corporate customers in these cities by 2013 and develop at least 1,000 outsourcing vendors to meet the needs of multinational companies.
Hangzhou is a frontrunner and seeks to differentiate itself among other cities by providing higher-end services.
In February, the State Council designated Hangzhou as one of 20 "China's outsourcing demonstration cities."
Other such centers are Dalian (Liaoning Province), Wuxi and Nanjing (Jiangsu Province), Wuhan (Hubei Province), Chengdu (Sichuan Province) and Jinan (Shandong Province).
Hangzhou was also listed among the 20 outsourcing talent training centers in April. Now the local government has begun to set new goals and taken practical measures for further development.
Leaders of concerned government departments have formed a team to hold meetings every quarter and solve problems in outsourcing industry.
Each year there will also be a citywide outsourcing conference for work distribution and a final assessment at the end of the year.
A three-year action plan to promote outsourcing in Hangzhou has been released and implemented. The government aims to build Hangzhou into an international financial and first-class domestic software outsourcing center. A series of favorable policies have therefore been put in place in terms of fund management and training institutions designation.
The city has also created platforms such as the International Outsourcing Forum, the China International Service Outsourcing Fair and the International Outsourcing Business Development Summit, held over the past two years.
Attendees at the summit included business leaders, industry experts and officials from America, Japan, Europe, India and China.
Enterprises in Hangzhou are encouraged to explore the international market by attending outsourcing conferences, holding forums, forming leagues and applying for international recognition. Some 10 scientific zones in Hangzhou have been set up as key outsourcing zones.
Innovations sparkle in talent training methods, shaping a distinctive Hangzhou style of training. And for the first time in China, the city has set up an institute to cultivate professionals for outsourcing.
The government also focuses on the promotion of the local outsourcing industry and cooperation with famous international service companies.
KPMG, the audit, tax and advisory company, released a book in Hangzhou entitled "A New Dawn - China's Emerging Role in Global Outsourcing." The book introduces the status quo of outsourcing in Hangzhou and local favorable policies.
Improving the outsourcing environment is also an emphasis for the local authorities. The city is also taking the lead in releasing several regulations for protecting intellectual property rights in the outsourcing industry.
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