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Outsourcing to China gains popularity

Published: 25 Jun 2009 23:28:11 PST

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Jun. 26, 2009 (China Knowledge) - Large foreign enterprises are expressing more interest in China amid the global economic recession, said an official from the Department of Foreign Investment Administration of the Ministry of Commerce (MOC).

During the period from January to May this year, China established 1,057 new outsourcing service enterprises, and the number of employees in the industry increased by 246,000. The contract value in the outsourcing industry rose 13.2% to US$3.52 billion, while the value of executed contracts surged 45% to US$2.3 billion.

Experts said that the global financial crisis has caused enterprises to focus on increasing labor productivity, improving efficiency and reducing costs. This offers China, a country with relatively low labor costs, more opportunities for developing outsourcing services.

At the same time, since many enterprises have remarkably reduced R&D funds and expect to develop international markets through cooperation with Chinese counterparts, Chinese enterprises have the opportunity to develop high-end services.

The government has launched a series of preferential policies including reduced taxation and additional funding that strongly promote the development of outsourcing service enterprises. Still more policies regarding the domestic outsourcing industry are under discussion and expected to be formulated in early August.

It is estimated that China will receive outsourcing contracts worth US$30 billion in 2013, said Chong Quan, assistant of minister of commerce.

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