25.11.08

China Outsourcing Summit - Day 3

Some of the Summit delegates on a tour of the Tianfu Software Park

If you're following along this week, you know I'm doing a one-week phase-shifted live-blogging about the China Outsourcing Summit I attended last week.

This summit was hosted in the city of Chengdu, in the Sichuan province.  You'll remember the Sichuan province from the 2008 Sichuan earthquake, that killed around 70,000 people and devastated the region.  In Chengdu, located about 20K from the epicenter of the quake, I saw no visible damage remaining.  But the city has been busy.  This summit was clearly a focal point for the rebuilding and recovery effort; and everyone I spoke to about the quake had a nearly palpable desire both to illustrate the resiliency of the Chinese nation and, more importantly, just to get back to normal. 

That aside, my first full day in China began with an introduction to the power of an autocratic socialist state.  As part of the introduction to my tour of the IT parks in the city, I was made aware of two significant state decisions that have directly and materially benefited Chengdu. The first was the announcement of a $150 Billion (900B RMB) infrastructure rebuilding campaign that will last the next three years.  The second was Chengdu's inclusion in China's 1000-100-10 Project.

1000-100-10 Project

Here's the summary:  (You won't find this on Wikipedia, and I hadn't heard about it until this trip...)  
  • The 1000-100-10 project is part of China's 11th 5-year plan.  You'll no doubt remember 5-year plans from your high school world history courses.  Think of them as comparable, in American-centric terms, to the campaign promises of presidential administrations.  In the current (11th) 5-year plan, China seeks what seems to be achievable growth over pretty much every economic sector and measurement you could imagine.  It's an ambitious plan, in a long series of ambitious plans.
  • The 1000-100-10 program is a small subset of this 5-year plan, focused on China's emerging IT Services Outsourcing industry.
  • The "1000" comes from their stated goal of establishing 1000 mid-to-large scale outsourcing companies in China.
  • The "100" comes from the goal of winning the outsourcing business of 100 "internationally famous" MNCs.
  • The "10" represents the 10 "base cities" they've selected, in which the government is funding development of IT parks and centers of innovation comparable to the largest office parks in the US.  Think "not as big  as Silicon Valley" but significantly bigger than "the Cisco Campus in Silicon Valley."
  • For reference, the cities are:  Dalian, Shanghai, Xi'an, Chengdu, Shenzhen, Beijing, Tianjin, Jinan, Wuhan, Nanjing, and Hangzhou.  There are 11 cities in this list, a discrepancy for which I have found no explanation other than "1000-100-11 doesn't work, does it?"  
  • Within each of these target cities, the ChinaSourcing Working Committee (which I will introduce by simply saying "it is exactly what it sounds like")  is steering educational institutions to tailor degree programs to the needs of the outsourcing industry.
  • The Working Committee also runs the PR and marketing campaigns for these cities, and they do an amazing job producing professional collateral to "sell" the cities.  
  • The Working Committee has also led the creation of incentive structures that make it very attractive for companies and individuals to relocate or set up shop in these target cities.  The list of amenities the government provides includes:  100% income tax refunds for qualifying workers, spousal work placement, short-term company subsidies for hiring new college grades, 15% company-tax rebates with further incentives for companies with higher headcount, 1% total subsidy on software exports, and a "welcome home" bonus of 200,000 RMB for non-resident Chinese who return to China to start a business.  It's an impressive incentive package, and a fascinating communistic take on Keynesian economics.
  • Lastly, the Working Committee is responsible for the development of office parks in these cities, complete with shared lab space (with computers and software), managed infrastructure, and amazingly cool modern buildings.
There are links to translated summaries of the 1000-100-10 Project here and here.


A member of the ChinaSourcing Working Committee, telling us about Phase II of the Tianfu Sofware Park

As the picture above suggests, I toured one of these newly developed software parks.  It was impressive. The architecture was stunning.  The offices we toured were spacious, interesting, and full of people who were apparently gainfully employed for the companies located there.  The tenants at Tianfu Software Park (the motto of which is "a Five-Star Technological Platform Accelerating Industrial Growth") include some big names:   Nokia, NEC, IBM, Symantec, and SAP, just to name the highlights...

The day concluded with a welcome reception wherein I was obliged to sit and listen to about three hours of speeches from an array of government officials, committee members from ChinaSourcing, and Gartner analysts.  The talks were all given with simulcast translation (we all got receivers with three channels - Mandarin, Japanese, and English).  It was comparable to what I imagine it's like to be in the UN, only with software people instead of diplomats.  Below are some quotes I jotted down from the speeches.  These were interesting to me because they reflect the tone and rhetoric of the party and government officials, which I would describe as dogmatically optimistic:
  • "Will China become the global leader in IT Outsourcing?  This is only a matter of time!"
  • "There will not be another earthquake in Sichuan for another 2000 to 4000 years."  (I was told this might have been a bad translation.)
  • "This plan reflects the importance to building an harmonious socialist society."
...not your typical fare for a IT outsourcing conference in the US anyway.  

From a tourist's perspective, Chengdu is a pretty city.  The infrastructure is amazingly well developed.  Construction is booming, and there is no view of the skyline that doesn't include one or two construction gantries.  The only complaint I had was that it was gray - gray sky, gray streets, and gray horizon.  One of my fellow travelers (who manages a team of engineers in a coastal city in China) said this grayness is an omnipresent state in all Chinese cities, due to the large-scale pollution.  Having been in LA recently, I know this isn't exclusively a Chinese problem, but still, it's a sad portent of things to come.  

Foggy morning, 18th-floor view looking out over Chengdu


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