Dalian Emerging as Outsourcing Hub

July 17, 2009 Posted by China Briefing Reading Time: 2 minutes

Photo courtesy of flickr user Galaygobi under the creative commons license Jul. 17 – China’s northern city of Dalian in Liaoning Province is emerging as one of the key outsourcing hubs in the country.

Due to the province’s proximity to Japan, it has primarily attracted investment from Japanese investors and now handles an estimated 80 percent of Japan’s outsourcing needs.

Since the 1990s, the city has been working to build itself as a leader in IT and software development; successfully attracting multinational companies like Intel, IBM, Hewlett-Packard, Accenture, Sony, Dell and Panasonic.

It enjoys staunch support from Beijing and is considered one of the country’s 11 national software industry bases as well as being known as a national software export base.

In the Dalian Software Park, close to half of all businesses established there are foreign-owned. The park is distinct because it is managed like a private business rather than like a state-owned enterprise.

While Dalian is still not at par with top outsourcing destinations like India and the Philippines, it is one of the world’s top ten along with Beijing, Auckland, Shanghai, Brisbane and Kuala Lumpur according to a Global Delivery Index (GDI) 2008 report.

The report evaluated 35 cities in terms of rent and labor costs, language skills and political risk, to name a few. It says that while running an outsourcing business in Dalian is cheaper overall, the city struggles with providing a competitive labor pool and still lacks infrastructure compared to other locations.

This may change as the city takes advantage of the financial crisis to attract more business and investment in the city. Beginning this year, the local government pledged more support of foreign investment in the city.

U.S. tech giant, Dell, announced this month that it would build a solution center in the city’s Zhongshan district. The center will conduct consulting services and IT training for local and international businesses.

Shanghai-based, Shui On Land, committed US$2.2 billion to build the Dalian Tiandi Software Hub featuring IT training schools, R&D facilities, residences and shopping malls . The initial phase of the project is set to open by the end of the year.

The coastal city of Dalian is found at the east of Bohai Sea and west of the Yellow Sea. Due to its clean surroundings and great weather it is a popular tourist destination and was ranked as one of top cities in the country in terms of quality of living.

For inquiries on doing business in Dalian, email dalian@dezshira.com.