Your honorable President Kai Kammerich,

Distinguished guests,

Ladies and Gentlemen,

Good morning！

I want to thank you for inviting me to address the conference.

As an important form of international service sector transfer,
outsourcing service has attracted more and more attention. Taking this opportunity, I’d like to share with you my views on how investment promotion agencies could facilitate the development of outsourcing service by taking the situation of Guangdong into account.  

I. Status quo of outsourcing service in Guangdong

In recent years, international outsourcing services have scored tremendous development and broad prospect.  Under the instruction of provincial government and Ministry of Commerce, Guangdong province has quickened its steps to absorb foreign investment in service sector and achieved remarkable effects in outsourcing service.  According to initial statistics, by the end of 2006, there had been 3559 enterprises in Guangdong engaging in outsourcing services with a total investment of USD 10.37 billion, turnover of RMB 16.5 billion, export of outsourcing service for USD 3.11 billion, and employees of 273,000. In which, there were 3,066 outsourcing enterprises with foreign investment, they had a total investment of USD 9.13 billion, turnover of RMB 14.33 billion, export of outsourcing service for USD 3.05 billion, and employees of 262,000.  In addition, Shenzhen had been elected as one of the first “China Outsourcing Service Base” cities, Guangzhou is actively promoting the preparation for its application.

Given the development in recent years, there are five features in Guangdong’s outsourcing service business: first, the outsourcing service is focused on software development.  By the end of 2006, Guangdong Province had 1800 enterprises engaging in software outsourcing services, among which 1600 were foreign-invested companies.  Secondly, the outsourcing of business procedure programs has reaped momentum.  For example, the company engaging in dealing with e-documents under HSBC has continuously expanded its assets.  Thirdly, multinational corporations have speeded up their probe into outsourcing service sector in Guangdong, such as Microsoft, Erickson and NEC have invested to establish R&D centers in Guangdong to undertake the development of outsourcing services.  Fourthly, enterprises from Guangdong and Hong Kong have joined hands to expand outsourcing service market.  Many Hong Kong enterprises transfer the outsourcing contracts to Guangdong after they got the deal from Europe and USA, while quite a number of Guangdong companies have entered into the international market through Hong Kong, realizing diversified cooperation at multi-levels.  Both sides have achieved impressive progress in the development of outsourcing services.   Fifthly, software parks have played important roles in contracting outsourcing services.  The four software parks from Guangzhou, Shenzhen, Foshan and Zhuhai are the main force to undertake outsourcing services.

II. Major measures to promote outsourcing services in

Guangdong

First, enhancing organization and management.  In 2005, the provincial government set up a leading team for service-sector development to plan and coordinate the development of service sector in Guangdong.  In 2006, the provincial government put expanding introduction of foreign capital into service sector as top priority of economic and trade tasks, proposing to actively undertake the outsourcing services from multinationals, encourage foreign investment in software development, logistics and cross-boarder outsourcing services.  Meanwhile, the provincial government prepares to launch outsourcing service-promotion policies this year.  Secondly, making plans and goals for the development of service sector.  It is estimated that at the end of the 11th Five-Year Plan, Guangdong’s service sector growth shall account for 45% of GDP, in 2020, up to 50%.  Thirdly, governments at all levels have continuously launched encouraging policies.  In 2005, the provincial government launched Opinions to Speed Up the Development of Service Sector in Guangdong and set up a leading fund for service development.  Shenzhen established special funds for software export and outsourcing encouragement under the special fund of software development.  Fourthly, carrying out campaign of personnel training for outsourcing services.  For example, in 2005, Shenzhen started the program of “Sino-India Advanced Software Professional Training Plan”.  In 2002, East Software Group founded an information college in Nanhai, Foshan, recruiting more than 5000 students.  Fifthly, enhancing commercial promotion together with Hong Kong.  In recent years, the governments of Guangdong and Hong Kong have organized varied outsourcing service promotion activities within jurisdiction.  They have also held special seminars and introduction meetings jointly in Europe, Japan and USA, displaying the investment environment of the Pearl Delta and introducing enterprises to engage outsourcing service contracts.  The aim is to constitute a new form of cooperation between Guangdong and Hong Kong. 

III. Outsourcing advantages of Guangdong

Guangdong has formed a foundation and capacity to speed up outsourcing service development.

1. Great potential for service industry

In 2006, Guangdong scored GDP of RMB 26 billion Yuan, number one in mainland China and accounting for 12.3％ of the whole nation.  Among others, the service industry first broke through RMB 1 trillion Yuan, accounting for 12% of the whole service sector of the country.  People’s living standards have improved to a comfortable level.  Residents’ consumption capacity has enhanced.  In 2006, the deposit outstanding amount  in financial institutions accounted for 1/8 of the whole country, retail sales took up 1/9，and GDP per capital amounting to USD 3509.  During the 11th Five-Year Plan, Guangdong’s economy shall maintain stable and fast growth.  It is estimated that its GDP shall increase by 9%，GDP per capital shall be twice than in 2000.  The service industry has great potential for growth.

2. Strong industrial foundation

In 2006, the total production, export and sales amount of electronic information industry in Guangdong all accounted for 1/3 of the nation.  The turnover of software and system integration exceeded RMB 60 billion, recognized software enterprises  accounted for 12% of the country, realized sales and export took up 24% and 52% of the country respectively，staying at a leading position of the nation.  Huawei’s GT800 and ZTE’s GOTA have been recognized as global original invention by the country, realizing comprehensive China-made intellectual property right in all core technologies, from chips, application to security.  MP3 chips designed alone by Actions Semiconductor Co., Ltd have accounted 40% of the global market share, number one in the world in terms of the share.  Guangdong Linux public technology support center and implanting software technology support center have become important platform to pool software enterprises both at home and abroad.  IBM, Intel, Oracle and Red Hat have all set up laboratories in the Linux center.  An up- and down-stream cooperation chain has been in place between software design, production and manufacturing enterprises.

3. Mature outsourcing service industrial parks

Currently Guangdong has four state-level software industrial parks: Guangzhou, Shenzhen, Foshan and Zhuhai.  Guangzhou Tianhe Software Park realized a turnover of RMB 10.51 billion in 2005, accounting for 8.7% of the national software income.  Its number of enterprises, industrial size, technology innovation and platform construction rank number one in the country.  Shenzhen Software Park now attracts IBM, Oracle, Microsoft, HP, Jindie and Tencent well-known names.  These parks have created good environment for software development, technology innovation, industrial progress and expertise concentration, which are important vehicles to expand outsourcing services.  In addition, Dongguan Songshanhu Industrial Technology Park recognized by Ministry of Technology as the most prospective high- and new-technology development zone in 2002 and Nanhai Qiandenghu Financial High- and New-Technology Service Park in Guangdong are ideal places for outsourcing services as they have complete supporting facilities and convenient transportation. 

4. Full reserve of professionals

Since the adoption of reform and opening up policies, Guangdong has attracted expertise both at home and abroad, forming its advantages in human resources, especially in IT to expand outsourcing services.  In 2004, Guangdong had 92 universities and colleges, enrolled students 727,000, graduates of 125,000 every year.  20 universities, including Zhongshan University, South Science University、Jinan University may provide more than 6000 graduates majoring in software engineering, electronic information and computer every year.  There are 1.373 million special technology professionals in state-owned enterprise and break-even organizations in Guangdong, among which 142,000 are engineering technicians.  At present, there are 120,000 people engaging in software in Shenzhen, quite part of them are excellent pilot workers.  Guangzhou has all necessary technicians, technology staff, scientists and researchers for outsourcing services, numbering 753,000, 131,000, 80,900 and 44,000 respectively.  In addition, Guangdong has 26 academicians from China Academy of Science and China Academy of Engineering, 5 state-level key laboratories.  
IV. Investment promotion agency’s role in developing outsourcing services
Though Guangdong has a good foundation and potential to develop outsourcing services, it still lags behind compared with Dalian, Beijing and Shanghai.  This does not match with its economic status.   Facing the new round of industrial transfer represented by outsourcing services, I believe the investment promotion agency, as a promotion arm of the government, must grasp the opportunity and devote itself fully to expand the growth of outsourcing services.
Now, I’d like to talk about how investment promotion agency should do to promote the development of outsourcing services.  I believe attention should be focused on the following four points: find the right target, innovate form of business inviting, foster implementing vehicles and train professionals.

1. Identify targets according to local outsourcing service
development plan.

The targeted serving entities and market should be made clear according to local industrial foundation and features as well as the general plan of the development of outsourcing services.  For instance, Guangdong is more advantaged in IT industry, it should focus on Europe, USA, Japan and Hong Kong market, concentrate on software outsourcing, R&D, system application management and maintenance and data processing and speed up business procedure service such as banking backward office service, financial settlement, human resources service and multinationals’ global procurement centers.

2. Innovate business introduction form

Efforts should continuously make to improve business inviting system and form, promote business inviting forms through software park, website and agents, and organize varied outsourcing conferences and seminars. Large existing outsourcing companies should be encouraged and guided to expand assets and business, driving more supporting enterprises to be involved and forming congregation effects.  Returned overseas students should be encouraged to launch private high-technology enterprises to undertake outsourcing services.  In recent two years, foreign economic and trade department of Guangdong has hosted varied campaigns to promote outsourcing services.  Every year Shenzhen organizes China (Shenzhen) International Projects Outsourcing Fair and has achieved impressive results.

3. Give software parks and base cities full play as vehicles
to take outsourcing services.

Focus should be made to construct software parks of state- and province-level and create a group of first-class international leading bases for software development, export and personnel training, attracting multinationals and overseas Chinese students to make investment and ventures in the parks.  Give Shenzhen the demonstrating role to play in outsourcing services, construct Guangzhou National Web Game & Cartoon Industrial base and explore outsourcing services to Europe, USA, Japan and Korea.

4. Making great efforts to train professionals

Multi-from and multi-channel shall be explored to train professionals for outsourcing services.  Efforts shall be made to promote the cooperation between enterprises and universities and scientific research institutes, bridge roles of industrial associations shall be given to play in order to train more people.  International personnel exchange and cooperation should be strengthened, special professionals engaging in finance, insurance, modern logistics, information service, exhibition and intermediary services should be introduced and trained so as to lay good foundation for undertaking outsourcing services.

Lastly, may I wish the conference a complete success.  Wish everyone good health and prosperity.

Thank you！