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City eyes outsourcing opportunities(China Daily Via Thomson Dialog NewsEdge) Aiming to promote economic transformation and industrial improvement, the government of Wuxi has poured its efforts into developing the international outsourcing industries. The growth in outsourcing has had an impact on the city's traditional manufacturing industry - less investment and land is needed, while more profit created - the choice has paid off for Wuxi. From January to July this year, trade in the outsourcing industry reached $230 million. This industrial transformation marks a big stride into the global market for Wuxi. The city plans for its outsourcing industries to eventually rank second place in Jiangsu Province, reaching a total value of $3 billion in 2010. By 2015 officials expect profits to reach $15 billion. To meet these goals, the city plans to offer its own incentives to foreign companies, offering talents exchanges, intellectual property protection, improving public service systems and trade service systems. From March to June this year, the Wuxi government set up groups aimed at establishing bases for Information Technology Outsourcing, Business Process Outsourcing, and Animation Outsourcing. Why outsourcing? Why has Wuxi decided the outsourcing industry will be the pioneer for its transformation? Firstly, Wuxi is located in East China's Jiangsu, a coastal province offering convenient sea links to other Asian markets. The city targets more than 75 percent of its outsourcing services at the Japanese market, especially the IT industry. In the last 20 years, more than 1,000 Japanese companies have moved to Wuxi - 30 of these are listed among the world's top 500 enterprises. The outsourcing industry offers low costs and high profits. A consensus has been reached that it will be useful to develop a brand and image for the city through its outsourcing industry, offering even greater profits in the long-term. Moves to improve businesses' legal protections and Wuxi's open economy also attract foreign companies to Wuxi's outsourcing industries. Straddling the preferential policies of the Wuxi government and the upward trend of the city's marketing economy, the Wuxi High-Tech Industrial Development Zone is at the center of Jiangsu's developing outsourcing industries. A total of 54 new outsourcing companies were established in Wuxi from January to July this year. Various famous outsourcing brands have established themselves in Wuxi, such as Sunshine Media and Beijing Huizhongyizhi. In February this year, the biggest IT outsourcing enterprise in Japan set up the NEC Eastern China Outsourcing Center in Wuxi. Other Japanese companies operating in the city include: OBC and NTTDATA. In October, the Sunan International Airport will open in Wuxi, and a new Sino-Japanese airline will go into operation. The new air link will drive the increasing cooperation with Japanese outsourcing enterprises. To answer the question of what kind of benefit the outsourcing industry will bring to Wuxi, the Wuxi Foreign Trade and Economic Cooperation Bureau presents an interesting sum: If every IT outsourcing employee creates 20,000 yuan ($2,500) tax income per year, 2,000 employees will contribute a total of 40 million yuan ($5 million) - and all they need is a building with computers. "But, imagine a factory with 2,000 workers - definitely less tax income, but much more land used," said the head of the bureau. Making money through outsourcing has also helped small enterprises grow. Hua Yang Software, for example, had only 15 employees in 2003. Four years later it is taking part in three joint ventures and has 800 staff. Copyright 2007 Chinadaily.com.cn, Source: The Financial Times Limited |