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The IT Tsunami Wave rolls into China
by Valerie Sartor
2008-03-22 09:47:07
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Cyrill Eltschinger, celebrated author of Source Code China (2007, John Wiley and Sons), arrived on the Chinese mainland in late 1994, working for a subsidiary of GM after being based in Singapore, the business hub of the Pacific Rim at that time. “Things were a lot different than they are today,” the suave Swiss businessman reminisced at a recent book talk here in Beijing. “No ex-pat wanted a posting in the PRC. Business was done in my office via two overloaded fax machines. China has adapted at record speed, going from a strong manufacturing base toward a high end services sector, yet some foreigners still regard China as a place for low skilled cheap labor. That’s not true anymore and that’s what my book addresses.”

Mr. Eltschinger confessed that he wrote his book out of personal frustration: he wanted to advertise to the world what China has to offer from a software/high tech perspective. With the fast growing market, promoting outsourcing with a China destination is crucial, Eltschinger explained. He enthusiastically asserted that the China market provides 90% of the factors needed for successful outsourcing: top sponsorship, treating people fairly, involving employees, good communication, sufficient training, among other things. Moreover, Mr. Eltschinger said that China’s image has been considerably spiffed up after becoming a member of the WTO and witnessing unprecedented economic growth. .

In fact, he predicts that by 2010 China will become the largest marketplace in the world in many diverse areas: cell phones, IT products, advertising, car parks, commercial aviation, chemicals and waste & recycling industries. Mr. Eltschinger pointed out that historically companies outsourced their business in the 1970’s to Australia, in the 1980’s to Singapore, in the 19990’s to Hong Kong and Japan, but now, in the 2000’s, everyone is heading straight for Mainland China.

Mr. Eltschinger’s book suggests that the Chinese Mainland is quickly transitioning from cheap, low skilled factory labor force toward a high value, high skilled engineering force, especially regarding IT. Economists have shown that this transition is part of the natural economic growth of many developing countries. Certainly China is experiencing growing pains, so to speak: having to deal with all kinds of problems associated with fast economic change: inadequate legal infrastructures, environmental monitoring, tax laws, and social unrest related to inflation, health services, worker’s compensation and human rights.

But Mr. Eltschinger is a true entrepreneur and quite positive that China can solve everything in due time, generating wealth domestically and abroad. The book’s focus - outsourcing high tech IT, explains that India has been the main global destination for the last twenty-five years but things are changing fast. “For outsourcing IT India is currently number one, China two, Brazil three and Russia four,” Mr. Eltschinger said, “but none of them have China’s potential high tech talent. Everything in China is growing, plus the market is stable. Both India and China have a lot of people but only China has a booming market that also provides access to a world class IT infrastructure. By the end of 2007 China had 210ml Internet users; 77.6% were broadband users. This wired market is second only to the USA and consists of only 50% of the population. With government subsidies this number is expected to increase enormously very soon.” He added that China currently has 15.9% of the global Internet users and that Chinese as an Internet language is second to English, with Spanish, Japanese and German trailing afterward.

“In 2007 it’s estimated that China graduated more than 350,000 computer science students as opposed to only 29,000 in 1998,” the writer stated, emphasizing that the US and India figures have remained flat. “Beijing, Shanghai and Xian are the three main training cities for computer science majors and China now has 53 high tech parks for industry and R&D, with 29 of them listed as world class facilities. India cannot compete with that.”

The author did concede that China has several challenges to overcome. “International trade shows need to be improved,” he asserted, adding that many Chinese IT facilities also now have received international standards certifications to validate them globally. “There are cultural issues, there is the RMB revaluation issue and there is the Indian head start of 25 years.”

Clearly, Source Code China enthusiastically promotes China as an outsourcing paradise, with the largest pool of technical talent, ten years of stable, rising economic growth, a world class infrastructure network, English widely spoken, government subsidies for business, infrastructure and workers, and the lowest rates globally. Whether the book’s optimistic predictions remain on track or whether China experiences negative reversals from environmental degradation, rising inflation and social unrest is yet to be seen. Many people here in Beijing are waiting for the Olympic Games to come and go before making any more bets on what will happen here in China.

Click here to buy Source Code China from Amazon.com

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Emanuel Paparella2008-03-22 12:17:58
What will happen in China after the Olympic games have come and gone despite the call for a boycott by Western activists who don't seem to know what exactly they are protesting, is that the Chines will continue on their merry way of economic prosperity privileged above and beyond human rights, democracy and freedom; and they will do so with the tacit approval of the West which is indebted to them up to its neck. Given a choice I'll take India any time. India has taught to world that economic prosperity is not necessarily incompatible with respect for one's heritage and democracy.

Alexandra Pereira2008-03-24 11:25:22
"despite the call for a boycott by Western activists who don't seem to know what exactly they are protesting"
Man, I don't even want to know what that means... do you really think they don't?

AP2008-03-24 11:29:41
and do you really know exactly what you are saying when you do this kind of prophecy: "the Chines will continue on their merry way of economic prosperity privileged above and beyond human rights, democracy and freedom; and they will do so with the tacit approval of the West"??
I really hope it's not a self-fulfilling one - at least in your case.

LL2008-03-25 06:51:36
There is much suffering due to poverty there. Watch for article I just sent to Asa.

It's not all happy and merry and we know it. But we are certain to be more on target to pray or at least hope for the happiness of 1 Billion people than to wish anything else, na?

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