Chengdu, the capital city of Tian Fu Zhi Guo has a significant historical background. The city originated as an indispensable part of ancient Chinese culture, the Bronze culture. Chengdu also stands out for its Chu embroideries and brocades and is a flagship of the handicraft industry in China.
When the global recession hit the Chinese economy, the country intensified its focus on the software services and outsourcing industry, while manufacturing continued to be the mainstay. Several Chinese cities vie with each other for a fair share in global services delivery and Chengdu is not far behind with its available talent pool, infrastructure and other environmental advantages.
Chengdu is ranked 33rd in the Global Services-Tholons Top 50 Emerging Outsourcing Cities -2009 study. Chengdu Tianfu Software Park, established in 2005 gives a boost to the country's IT and service outsourcing Industry. The park offers services like recruitment, staff dispatching, company incorporation, BOT/outsourcing solutions and training services to the companies who want to set up their center in the park. This step has contributed towards the enhancement of IT services like software development and infrastructure services in Chengdu.
As per Tholons , an investment advisory firm, in 2008, the revenue from Chengdu's software industry rose by 37.7% year on year reaching RMB 42.7 billion, which accounts for 5.6% of the nation's total. Currently, more than 450 certified software enterprises operate in Chengdu, including 102 enterprises with integration qualifications for a total of 100,000 practitioners.
Chengdu is the most cost effective destination as compared to other provinces in China. The average wage in Chengdu's IT and IT-related industries is less than half of that in Beijing and Shanghai. The average entry level salary in ITO is US$400 – 500 and that for a BPO is US$250 – 350.
In 2009, Chengdu had many new notable companies setting up data centers: Accenture (February), DHL (April), Alibaba.com (July) and Wipro (November).Other service providers and captives in the city include Siemens, Lafarge, IBM, Amazon, Microsoft, Symantec, Ubisoft, Gameloft and GGL.
“Unlike Dalian, which due to its language capabilities is an excellent fit for Japanese/Korean clients, Chengdu is more versatile,” says Saugata Sengupta, Analyst, Tholons Advisory Firm. With its mix of not only language versatility (Japanese, English and Chinese) but also higher education institutes, Chengdu offers a strong value proposition to both American and European clients.
Although significant progress has been made by the central and the various provincial governments to pass IP related laws, the implementation still remains quite weak
The investment climate in China has improved over the years and Chengdu in particular offers one of the largest SEZs in the world which has proved a significant attraction to investors. The government has lately offered attractive incentive packages for organizations looking to establish in Chengdu (IT/BPO space) – making it a viable and attractive option.
Sengupta of Tholons concludes, “China in their evolution to a services economy from a primarily manufacturing driven economy, has to seriously consider collaboration and not competition among its provinces. The environment of pure competition created by these provinces is detrimental to the development of China’s outsourcing potential and has turned out to be unhealthy for the 'China Outsourcing Brand'. Without a strong hold of the brand the country is offering, it cannot move into one direction and lacks a single value proposition in the client’s eyes.”