Wuxi is ready to become a ‘little India’
Wuxi, a picturesque city that lies along the Taihu Lake resort, is planning to build a “little India” in years to come.
Wuxi is traditionally a manufacturing city. But with more focus on environmental protection, especially after a serious blue-green algae outbreak in Taihu Lake that triggered a clean water crisis in mid-2007, city leaders started to study how to transform the city’s development.
Wuxi decided to replace manufacturing with the service outsourcing industry, which has far less pollution and consumes much less energy.
According to its ambitious development plan, the city is expected to attract $30 billion to $40 billion in service outsourcing business and help create service outsourcing jobs for 1 million people by 2020 – equivalent to that of India as a whole in 2007.
The advancement of the service outsourcing industry cannot survive without a large talent pool.
But the city three years ago learned that fewer than 2,000 students in the city were studying software and information technology fields.
As a result, Wuxi established a goal to build a total area of 6 million sq m for software service outsourcing within three years, and encouraged enterprises to cultivate and import skilled workers.
These policies were well received. In 2008, Wuxi’s service outsourcing business accounted for 39.2 percent of companies in Jiangsu province, and the city employed 28.5 percent of Jiangsu province’s service industry employees, according to Fang Wei, deputy mayor of Wuxi.
Growing jobs
This year, the Wuxi government launched a new program to train university graduates. Outsourcing companies will receive a rebate of 4,000 yuan ($586) for hiring a graduate, and every graduate of the training program will receive 1,000 yuan as a subsidy.
The city’s financial sector is also actively providing financial support to enterprises in the service outsourcing industry.
In February, Wuxi became one of 20 cities approved by the General Office of the State Council to build a service outsourcing demonstration city.
In June, 15 banks provided a credit line of more than 4 billion yuan for the city’s 115 service outsourcing enterprises.
The local government joined India’s National Institute of Information Technologies (NIIT), the world’s second-largest educational institution, to establish the NIIT (China) Outsourcing College in Wuxi as a training base for the city’s outsourcing businesses.
While the domestic macro-economy continues to be affected by the global financial crisis, outsourcing is maintaining robust growth in Wuxi.
The city signed $1.14 billion in contracts from January to July, up 110 percent year-on-year.
Experts estimated that by 2010, there will be as many as 100 international service outsourcing and software exports enterprises with annual export values of as much as $30 million.
So far, Wuxi has attracted 22 investment projects from leading multinational service outsourcing corporations and 50 domestic industry heavyweights. Half of China’s top 10 industry heavyweights have established headquarters in Wuxi.
But Fang is looking at bigger goals. “Wuxi is on its way to becoming a ‘little India’,” he said.
After India matured as the world’s largest service-outsourcing base, many East Asian countries – including the Philippines, Singapore and Vietnam – began competing for more market share.
“Enterprises from the Chinese mainland haven’t had much advantage in competing with these countries, but the cooperation across the Straits should bring some opportunities,” said Zhou Ming, deputy director of the China Council for International Investment Promotion (CCIIP).
The service sector accounts for more than 70 percent of the island province’s total GDP.
Zhou said Taiwan’s industrial development experience, technology and branding, along with a massive market and substantial human resources on the Chinese mainland, will greatly enhance the international competitiveness of both regions.
In spite of the financial crisis, the global service outsourcing industry posted a growth rate of 6.3 percent in 2008 – a strong performance in comparison to the world’s average GDP of 2.5 percent.
Many developing countries see the outsourcing industry as an opportunity to survive the international economic downturn, experts said.