China aims for outsourcing supremacy

By Mike Nagle

- Last updated on GMT

Related tags: Outsourcing, China

The Chinese government has announced plans to consolidate their
outsourcing industry in an effort to capture business from other
developing countries such as India.

Intrinsic advantages that China offers such as lower wages need to be combined with financial and logistical improvements in other areas if the People's Republic is to capitalise fully on their potential as a major outsourcing hub.

In order to combat the fragmentation seen within China's outsourcing industry Assistant Minister of Commerce, Fu Ziying, has outlined plans to develop 10 outsourcing base cities, starting with Shanghai, Dalian, Xi'an, Shenzhen and Chengdu.

Fu hopes the scheme will encourage multinationals to shift offshore outsourcing services to China and promote up to a 1,000 native outsourcing enterprises.

He said: "The Ministry of Commerce is to channel social resources into innovation-oriented enterprises, and support policies will focus on enterprises rather than export products."

India looking east

Remarkably, the increasing opportunities available in China aren't just attracting the usual expected clients. Developing countries such as India are also taking advantage. Indian outsourcing company Tata Consultancy Services (TCS) are expanding their operations into China, adding up to 5,000 new workers to their Chinese operations over the next 3 to 5 years.

A further boost to China's outsourcing industry is provided by a recent lifting of a World Trade Organisation (WTO) restriction, allowing foreign banks in China to operate in local currency.

The resultant expansion of the banks networks coupled with the introduction of new services will make it easier for European and American pharmaceutical companies to outsource services to China.

Bridge Pharmaceuticals, a preclinical CRO based in the US, have also moved into China by building a new animal research facility at the Zhongguancun Life Science Park in Beijing that operates to US level good laboratory practice (GLP) standards.

Chinese companies are becoming more outward looking especially with respect to conforming to international standards. For example, SynTheAll Pharmaceuticals, the manufacturing unit of WuXi PharmaTech, China's leading supplier of pharmaceutical R&D outsourcing services, has been recertified as International Organization for Standardization (ISO) 9001:2000 compliant.

Related topics: Contract Manufacturing & Logistics

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