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China Daily Website

China targets service industries

Updated: 2013-06-16 08:41
By Bao Chang in Wuxi, Jiangsu ( China Daily)

As leading world economies move to outsource service sectors, China must take advantage of the new trends, say analysts

Now is the best time for China to develop its service trade, and the country can become one of the biggest outsourcing service providers in the world within the next few years, Wei Jianguo, former vice-minister of commerce and secretary-general of China Center for International Economic Exchanges, said on Saturday.

At present, outsourcing service buyers in developed economies are moving their focus from investing in labor-intensive industries to the outsourcing service in high technology and research and development sectors.

"China should seize this unprecedented opportunity and get a foothold in the transaction of the world's service trade and gain an advantage compared with other emerging economies which are also seeking new opportunities in the outsourcing industry upgrading," Wei said.

Wei was speaking at the Sixth Global Outsourcing Summit in Wuxi, in East China's Jiangsu province.

Jointly organized by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, the Asia-Pacific CEO Association and the People's Government of Wuxi Municipality, the summit targets the promotion of multinational outsourcing and insourcing cooperation, and looks at the city's transformation amid economic globalization.

Located in the center of the Yangtze River Delta, Wuxi has been selected by the State Council as a showcase city for service outsourcing in China.

Wei said that the development of the service outsourcing industry should be part of the national strategy, as countries in the world are shifting new economic growth points from manufacturing to servicing.

In an effort to reduce cost against the global financial crisis backdrop, many multinational companies are increasingly keen to contract out business, including technology, research and development, financing and human resource.

"If Chinese service enterprises can't grasp those new opportunities, they will be overtaken by their counterparts from emerging economies including India, Malaysia, the Philippines and Poland," said Wei.

The whole service outsourcing market scale will be worth $5 trillion worldwide within the next three to five years, according to Wei.

China is now the second-largest outsourcing service provider in the world, accounting for 27.7 percent of global service outsourcing market.

Data from the ministry show that total value of outsourcing service Chinese enterprises had undertaken increased from $4.69 billion in 2008 to $33.64 billion in 2012, with an annual growth of more than 60 percent.

Wan Lianpo, deputy director of the ministry's department of trade in service and commercial services, said China's service outsourcing industry is growing rapidly and the country has established a favorable business environment for the development of talent in recent years.

"The growth of service outsourcing industry has apparently benefited the economic growth module transmission, industrial upgrading and employment promotion," Wan said.

The service sector comprised 44.6 percent of China's GDP in 2012, and accounted for 36 percent of the nation's jobs.

In the first quarter, China's overall trade in services rose 14.4 percent from a year ago to $120.1 billion, with exports gaining 7 percent year-on-year to $46.5 billion and imports rising 19.7 percent to $73.6 billion, yielding a trade deficit of $27.1 billion, according to the ministry.

"The development of the service trade will also help to resolve trade imbalance between China and developed economies including the United States," said Huo Jianguo, president at Chinese Academy of International Trade and Economic Cooperation.

baochang@chinadaily.com.cn

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