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Software management sought across China

By Xia Huan (China Daily)
Updated: 2009-09-10 08:50

A delegation of a number of the founders of the park returning to celebrate its 10 year anniversary.

The software industry in Dalian has experienced dramatic growth over the last 11 years, establishing the city, one of the largest the northeastern Liaoning province, as one of the key centers for growth in the sector across China. Its success has also delivered huge economic benefits to the city.

The rise of the software and information serviced outsourcing industry has had a huge impact on the economies of many of the northeastern coastal cities. Following the establishment of the Dalian Bureau of the Information Industry and initial work beginning on the Dalian Software Park in 1998, the city has very much played to its strengths. This has led it to nurture the development of both its software and service outsourcing industries in a bid to overhaul the economic infrastructure of the city.

Over the past 11 years, the successful growth of the city's 3 sq km software park, set in the southwestern suburbs, has been described as little short of "miraculous". There are now more than 470 businesses based in the software park - including 37 global Fortune 500 companies.

The proportion of foreign-funded enterprises in the park is now 43 percent, making it the most successful software park in China. The park generates half of the total revenue of the city's software industry and two-thirds of Dalian's software export income.

Since its inception, the park has been developed and managed by the Dalian Software Park Co Ltd (DLSP). Its management team have been unwavering in their commitment to developing the park as the best software and service outsourcing destination in the world and one that is held in high regard by global software and financial multinationals.

Its success was cited in Thomas L Friedman's bestselling economic tome, "The World is Flat". In the book, Friedman tells readers: "I must go and see Dalian, China's Bangalore, in person."

Today, visitors following in Friedman's footstep will see the logos of IBM, BT, Oracle and Fidelity everywhere around the park. In its streets, you will brush shoulders with software technicians from the United States, the United Kingdom, Japan and India. A truly international working and living environment has now been established throughout the park.

According to statistics issued by the International Data Corporation (IDC), Dalian is now the number one city in China in terms of its ability to develop software and information services, as well as for its ability to meet the needs of an international client base. It is also rated number five globally on the same criteria. The figures issued by the IDC form part of their global delivery index (GDI), introduced for the first time last year.

Right from the very early days of the park, the DLSP adopted a policy of "private management with government support". This dynamic and highly effective operational system has played a vital role in the rapid development of the site.

This policy has seen a software park and a science and technology new town, integrating production, education and research, emerge side by side. It is now recognized as one of the key Software Industry Centers of the National Torch Plan, a National Software Industry Center, a Model City for the Internationalization of the Software Industry and a National Software Export Center by various ministries and government institutions in China.

In 2004, it was designated as a Software Export Testing Center for Europe and America by the Ministry of Science and Technology and, in 2006, it became the first China Service Outsourcing Center & Model Park.

These awards come as recognition that the park has now clearly established its industrial platform and created a comprehensive industrial environment for software development, education and training and business services.

DLSP's professional operation and management team are committed to providing in-depth, overall business and living space solutions for software and service outsourcing businesses in the park. The team aims to provide a world-class service in all aspects of park planning, property management and supplementary services.

As a preferred cooperation partner for many multinationals, DLSP has won a number of plaudits from its international associates.

In 2003, Accenture Technology Solutions (Dalian) Co Ltd officially opened its doors in park. Joe W Forehand, president and CEO of the company, said that Dalian's considerable advantages had lured him there.

He said: "Dalian has complete telecom infrastructure facilities, a stable commercial environment and highly qualified technical professional workforce, particularly its group of highly-skilled operatives who have a good mastery of Japanese."

In 2007, at the launch ceremony of the BT Technology (Dalian) Company, Ben Verwaayen, former global CEO of BT, said: "Dalian has an innovative environment and a rich repository of professionals, many of whom are eminently suitable for the development of our company".

The success stories of Dalian's software and information service outsourcing industry have also bought global recognition to the city.

On March 26, 2007, Intel announced its intention to invest $2.5 billion in setting up the "first chip manufacturer in Asia" in Dalian with its 90 nano-technology. The project, dubbed by the former US Ambassador Clark T Randt as of "milestone significance", has helped put Dalian on the map for semi-conductor development in China.

On Sept 7, 2007, when the Davos World Economic Forum hosted its summer meeting outside of Switzerland for the first time, it chose Dalian as its setting. One of the main reasons was that the forum's organizers believed Dalian would be a global IT center in the future. In September 2009, the third Summer Davos annual meeting will again be held in Dalian.

Two years ago, an eminent academic, Su Huixiang from the Dongbei University of Finance & Economics, led a group of post-graduates in a study of the software park. They examined the ways in which Dalian's software and service outsourcing industry would affect the city's industrial structure and economic development. It concluded that Dalian has entered its post-industrial era as its tertiary industry, for the first time, exceeded its second industry in terms of contribution to GDP.

Between 1998 and 2008, Dalian's software and information service industry maintained a rapid growth. Its sales revenue grew from 200 million yuan in 1998 to 30.6 billion yuan in 2008, a massive 153-fold growth.

During this period, the export value of the city's software and information service industry grew from $10 million in 1998 to $1.05 billion, up 105-fold.

During the decade, the number of employees in the city's software and information service industry expanded from 3,000 in 1998 to 75,000 in 2008, a 2,500 per cent growth.

This data also indicated that the contribution of the software and information service industry to GDP showed a considerable growth. In 1999, its contribution in terms of the added-value of the software and service industry to the GDP was 0.38 percent. In 2008, its contribution accounted for about 7.93 percent, representing a growth of more than 2,000 percent.

At the same time, the software and information service industry has been the sector that has witnessed the fastest growth in local tax revenue in Dalian. Individual income tax of software employees accounted for 46.8 percent of the total tax revenue of the industry in 2008.

The Dalian Software Park and its DLSP management team are quietly driving the economic growth and urban industrial restructuring of the city.

Back in 1998, the park was chosen to be the convergence point of the urban and rural areas of Dalian. At the time, it was a piece of wasteland. Since the first industrial building was built at the site and the first customer introduced to the park, it has looked at providing outsourcing services to Japan.

Its status was first established as a "software industry cooperative strategy port for Japan", then "a service outsourcing center for Northeast Asia". Eventually it settled on: "One world, one office". This positioning has seen the park grow at an annual rate of 11 percent.

To date, the DLSP has cumulatively invested more than 6 billion yuan in building a 1.5-million-sq-m science and technology town that integrates life, living, study and work. The town is now home to more than 470 businesses and 45,000 office workers. It is now established as an offshore remote technology global support center, a global rear-stage treatment center and a leading customer support center in the Asian-Pacific region. Its services include finance, accounting, human resource outsourcing, call center facilities and research and development.

After years of rapid development, the DLSP has now evolved a comprehensive and effective management model, one that can be extended to other sites. Currently it is also involved in the operation and management of the Wuhan Optical Valley Software Park, the Tianjin Binhai Service Outsourcing Industry Park and the Suzhou Software Technology Park.

The DLSP has precisely re-positioned these parks to create a complementary setup of various software and service outsourcing sectors. This has built a sound foundation for the rapid development of China's service outsourcing industry in a multi-level, multi-sector market-led environment.

In line with this thinking, the DLSP positioned the Wuhan Optical Valley Software Park as the Service Outsourcing Delivery Center for China through a marketing strategy of "China Service - Wuhan Delivery".

In Tianjin, the Tianjin Binhai Service Outsourcing Industry Park has been positioned as the global office of the Bohai Area, as the city is an important port on the Bohai Bay rim. In Suzhou, the Suzhou Software Technology Park has also been re-positioned. It is now seeking to establish itself as the service outsourcing center of East China, providing a huge stimulus for the economy of the area.

The distinctive high quality science and technology towns in Wuhan, Tianjin and Suzhou, all stem from the blueprint designed by the DLSP.