I. Overview of Nanjing
One of the central cities in China’s most economically developed region
Nanjing, the capital of Jiangsu Province, has an area of 6.582 thousand square kilometers with a resident population of 7.413 million. Located at the junction of China’s coastal and Yangtze River Delta economic zones, the city is one of the three major central cities in Yangtze River Delta zone. It plays a significant role in transiting the economic power from East coast cities to China’s West. Nanjing holds obvious advantages in developing outsourcing industry.
One of the most open cities in China
Nanjing has witnessed investment in more than 10 thousand projects from enterprises of more than 100 nations and regions with the foreign capital it has directly used reaching a cumulative value of over USD20 billion. Eighty-five enterprises out of Global Top 500 have established more than 150 companies in Nanjing. The percentage of foreign capital in the city’s fixed assets and the percentage of taxes from foreign enterprises in the total volume of taxes the city has collected both stands at about 20 per cent. Exports of foreign-funded enterprises account for more than 40 per cent of the city’s total value.
One of the cities with the most convenient transportation in China
Nanjing is a national transportation hub with an integrated transportation system that consists of railway, road, water and air transportation means. Nanjing Lukou Airport is one of China’s major airports, serving as mutual backup airports of Shanghai Pudong and Hongqio airports. The city has opened 120 airlines, which reach 42 domestic cities, 19 international cities and 2 regional cities. There are direct flights between Nanjing and Frankfurt, Singapore, Seoul, Tokyo, Osaka, Bangkok, Hong Kong, Macao, etc.
One of the most informationized cities in China
Equipped with the world’s most advanced telecommunication devices, Nanjing is a significant communication hub in China. It has established a comprehensive and worldwide communication network composing of mobile communication, fiber optic digital communication, and network communication which makes it the most important node of Jiangsu’s information high way. In the area of broadband support construction, there is a three-layer network—core layer, gathering layer, and connection layer which cover the entire city and supply users with secure and low-cost VPN services such as high-speed Internet access, residential broadband Internet access and LAN interconnection for commercial users. Till the end of 2008, there had been 1.06 million Internet users, of which 1million were broadband users. It is anticipated that at the end of the Eleventh Five-year Plan, the city will have basically completed the construction of nationally leading, multi-network and secure information infrastructure with the backbone network reaching over 200GB in capacity and 1.5 million Internet users.
One of China’s richest cities in intellectual resources
Nanjing is home to 41 universities, and has 105 independent scientific research and technology development organizations, 26 major national laboratories, three university science and technology parks, more than 30 international R & D organizations, and 25 enterprise incubators. In terms of talents, the city has 79 members of the Chinese Academy of Sciences and the Chinese Academy of Engineering, nearly 500 experts who are entitled to the State Council Special Allowance, and more than 530 thousand scientific researchers of all types. In 2008, the city had nearly 700 thousand college students, which make up 43 per cent of the provincial total. The colleges foster 150 thousand employees for the society every year, more than 10 thousand of whom are engaging in the IT industry.
One of the most culturally charming cities in China
Nanjing has a history of more than 2,470 years and used to be the capital for 10 dynasties. It tops China’s major cities in green coverage with the rate reaching 45%. It is one of the most livable modern cities, with many rewards and acknowledgements including: China Excellent Tourism City, China Garden City, China Hygiene City, and Model City in Environment Protection. The crime rate in Nanjing has been dropping for five consecutive years, and residents’ general satisfaction over public security has always been kept over 95 per cent, ranking the 2nd nationally. It has been awarded China’s Civilized City.
II. Achievements and Characteristics of Nanjing’s Outsourcing Industry
In recent years, Nanjing has been taking outsourcing industry as the strategic tool to implement the Scientific Outlook on Development and achieve rapid and sound development in economy. Nanjing is vigorously developing the industry in an attempt to seize the opportunities emerging in the new round of industrial shift, fully utilize its advantage in scientific talents force and release the potential of scientific and technological innovation. Under the city’s concentrated efforts, the outsourcing industry has made remarkable achievements.
Rapid expansion in industrial size
Till the end of September, Nanjing had won a total value of USD180 million outsourcing contracts, with offshoring contracts valued at USD1.12 billion. The value of executed contracts stood at USD 1.3 billion, USD 810 million of which was contributed by executed offshoring contracts.
Diversification of outsourcing business
At this stage the city has formulated four major types of outsourcing business: software R & D, animation production, pharmaceutical R & D and industrial design. Software outsourcing accounts for more than 70 per cent of the city’s total outsourcing business volume, with the part related with telecommunications and electricity constituting 30 per cent of that total.
Clustering of outsourcing enterprises
Nanjing hosts six outsourcing demonstration districts: Gulou District, Xuanwu District, Yuhuatai District, Nanjing High-tech Industrial Development Zone, Jiangning Economic Development Zone and Jianye District, which assemble nearly 70 per cent of Nanjing-based outsourcing enterprises, with the value of outsourcing contracts they have received and the value of outsourcing contracts they have executed both accounting for over 95 per cent of the city’s totals.
Internationalized enterprises
Nanjing has more than 450 outsourcing service providers, and 350 of them are engaging in software outsourcing business, among which three are ranked as China’s top 20 outsourcing service providers, nine are classified as national leading software companies, eight are members of China’s top 100 software enterprises. Ten enterprises are among China’s top 100 growing outsourcing service providers; more than fifty have been accredited certifications of CMM/CMMI3 or above; twenty-eight have been listed as Jiangsu’s leading outsourcing service providers in undertaking international outsourcing business.
Gathering of outsourcing talents
Nanjing-based outsourcing enterprises have offered nearly 100 thousand jobs, 76 thousand of which are taken by graduates with college degrees or above, accounting for 76.2 per cent of the total number. The city is now focusing on creating a national outsourcing talents training center. Various forms of industry-tailored talents trainings are being conducted, including college-enterprise cooperation to conduct talents training, college-college alliance to integrate resources and enterprise-enterprise coordination to strengthen in-service staff training. A continuous talents supply is saving reserve force for the city’s outsourcing industry development.
A rapid growth in public service platforms
Nanjing has established such organizations as International Outsourcing Enterprises Association, International Outsourcing Research Center, Outsourcing Business Incubator for Overseas Graduates and Pharmaceutical Businesses Outsourcing Center. A website and a reporting center for intellectual property protection have been established. There has also been a website about Nanjing’s outsourcing industry. Besides, the city has set up some professional platforms such as Nanjing Software Public Technology Service Platform, Jiangsu Software Testing and Evaluating Center, Software Services Trading Center and Software Talents Training Exchange Center.
Improved professionalism of intermediate organizations
Currently, Nanjing has such associations as International Outsourcing Enterprises Association, Software Enterprises Association, Animation Enterprises Association and Pharmaceutical R & D Association, which have played an effective role in bridging the government and enterprises, integrating industrial resources, intensifying enterprises cooperation and supplying industrial information. They have helped Nanjing-based outsourcing enterprises become bigger and stronger and promoted the development of Nanjing’s outsourcing industry in both quality and size.
Increasingly scientific investment and financing modes
Nanjing and its industrial zones are striving to create conditions and provide services to facilitate leading software enterprises to go listed at home or abroad. The government has given full play its role in guiding financial organizations to innovate tailored lending options for software enterprises and has offered support to software industrialization projects. Besides, it is conducting a feasibility research on the establishment of a civil-capital-based and government-guided multi-channel investment and financing scheme to encourage risk investment in software industry and gradually establish a risk investment mechanism for the industry. It is actively cultivating risk investors in the software industry: initiating risk investment fund and forming risk investment companies. It is also striving to open a green financing channel for outsourcing companies through active cooperation with investment organizations, banks, securities firms and bonding companies. Now in Nanjing there have been established some professional platforms for investment and financing, which include Nanjing International High-tech Risk Investment Service Park, Nanjing Zhongchuang Technology Investment Company, Nanjing Hairong Investment Fund for Overseas Graduates, Nanjing High-tech Venture Capital Management Company and Nanjing High-tech Business Loans Guarantee Center for Small and Medium-sized companies.
III. Developing Direction of Nanjing’s Outsourcing Industry
Jiangsu and Nanjing governments have been determined to build Nanjing into a first-class - outsourcing model city, a renowned software city and a modern service center of Jiangsu. Nanjing will stick to the Scientific Outlook on Development and the overall goal of an open economy, stay innovative and seize opportunities emerging in the post-financial crisis era. It will position outsourcing at the same important level of foreign investment and trade, strive to foster leading outsourcing companies, build first-class outsourcing industrial parks and promote the establishment of some famous outsourcing brands. The goals are to get a cumulative value of RMB20 billion outsourcing contracts till the end of the Eleventh Five-year Plan with the executed value reaching over RMB15 billion, to attract 150 listed companies setting up outsourcing companies in Nanjing, to have 100 enterprises accredited with CMMI3/CMM3 certifications or above with 20 of them getting CMMI5/CMM5 certifications, to foster three ten thousand-employee companies and 20 one thousand-employee companies, to train 100 thousand international outsourcing professionals with half of them holding college degrees, and to create 100 thousand new jobs in the industry.
IV. Nanjing’s key policies for promoting the outsourcing industry
1. To offer RMB50 thousand to 1 million rewards to international outsourcing growing enterprises, and to offer RMB1 to 10 million rewards to international outsourcing leading enterprises
2. To subsidize a certain amount of booth expenses for enterprises attending international fairs
3. To provide a certain amount of allowance for international communications line rentals
4. To provide car and housing allowance for high-level technical and management personnel of the Global Top 500 and the Global Outsourcing Top 100 which set up headquarters of their outsourcing enterprises in Nanjing
5. To grant tax incentives to major contributing employees in delivering services to international customers
6. To offer RMB200-300 thousand bonuses to enterprises accredited with CMMI certification and to cover 50 per cent of accreditation expenses for enterprises that obtain PCMM certification, ISO27001/BS7799 certification, SAS70 certification, with a maximum amount of RMB500 thousand.
7. To offer a certain amount of bonus to international outsourcing enterprises that set up R & D centers overseas.
(Reproduced from "ChinaSourcing" magazine)
