Golden era forecast for service outsourcing

Sector growing in importance for supply-side reform and as part of efforts to attract foreign investment

China's service outsourcing business will experience a golden era in the coming decade, with more policy support and further upgrades to the nation's industrial portfolio, a senior commerce official said.

Boosting service outsourcing is important for the country's ongoing supply-side reform, and the segment will witness even stronger growth momentum in the next decade, especially for high-end businesses, Wang Shouwen, vice-minister of commerce, told the China Sourcing Summit 2017 in Hangzhou, Zhejiang province, on Sept 29.

The service industry has contributed more than half of the country's economic growth during the first half of 2017, reaching 51 percent of GDP. Outsourcing services - in which a company contracts part of its existing internal activity to another company - created 1.21 million jobs in China last year, with a total of 8.6 million people employed in the sector.

"Driving up the service outsourcing industry is a national strategy. It is also part of China's efforts to attract more foreign direct investment. Relevant companies will enjoy more preferential taxation policies," Wang added.

The State Council announced a slew of new measures this year to further boost trade in services, which include extending tax breaks to more leading service outsourcing cities, reducing restrictions on investment and encouraging more overseas talent to work in China.

The total value of service outsourcing contracts signed by Chinese corporations in 2016 was 1.02 trillion yuan ($152.9 billion; 128.8 billion euros; ￡113.6 billion), up by 20.1 percent year-on-year.

The structure of the industry has to be further fine-tuned and upgraded, as is the case with many other industries of China subject to supply-side reform, Wang added.

Combining digital technology with service outsourcing has become the next growth engine for the industry, and it is the right time for relevant Chinese companies to undergo a digital-oriented transition, according to Zhong Boming, president of the Hangzhou Service and Trade Association.

Xie Shuangcheng, vice-major of Hangzhou, said the city aims to develop high-end outsourcing business, with priority given to the e-commerce, information and telecommunication sectors.

In fact, high-end service outsourcing business is also important to multinational companies such as Haier, which spends nearly $500 million each year on outsourced information and design services.

The multinationals want to make good use of global talent and service suppliers, Howard Yin, chief information officer and chief data officer and CDO of Haier Group, said at the summit.

"In fact, we want to jointly explore business opportunities and make innovations with our outsourcing suppliers and global talent," Yin said.

Liu Yukun contributed to this story.

zhongnan@chinadaily.com.cn

(China Daily European Weekly 10/06/2017 page29)