Advantages and Disadvantages of Sourcing from Chengdu

From the capital of the Sichuan province on China’s Western side, Chengdu has developed into a strong high-tech zone benefiting from its robust performance in service outsourcing.

Fields in Transformation

In particular the technology, the outsourcing, and the shared service areas have seen accelerating expansion – all boosting the economy of West China’s metropolitan city of Chengdu. The Director and Chief China Representative of the Confederation of Indian Industry, E. B. Rajesh, predicts that the city will grow into “one of the global IT centers in the near future”.

We have listed some of the advantages and disadvantages of sourcing from Chengdu below:

Advantages

• The Chengdu Hi-Tech Zone (CDHT): ranks the 4^th among all the China’s state-level hi-tech zones, more than 29,000 companies are registered or have R&D centers in the CDHT area (of which nearly 1,000 are foreign invested enterprises), among others are Nokia, Siemens, IBM, and Wipro Technologies
• The “Go West” policy, an economic milestone in China’s development: through intensive subsidies the government is encouraging development and is now experiencing a transformation in the Western located areas. Along with the “Go West” policy, companies operating in a number of Western areas are also being offered the lower rate of corporate tax at 15 % (compared to the regular rate at 25 %)
• Attracting talent from all over the country: in Chengdu attractive long-term careers are being offered to talented young graduates – an encouraging factor for companies who are in the search for locations to carry out long-term strategies
• Sustainable development: besides from hi-tech, the government of Chengdu is also focusing on areas such as e-commerce and education to maintain the position as the hub for service outsourcing in Western China

Disadvantages

• China’s poor infrastructure in the West: due to the lack of attention to China’s westside as developing into becoming an important economic zone to the country, the city is not yet a part of the currently running and highly-advanced infrastructure
• Communication barriers: compared to larger metropolitan cities as Beijing and Shanghai, it is a necessity to find an English speaking agent in order to avoid misunderstandings

Future Sourcing from West China

Despite the poor infrastructure in the Western part of China, the increase of 195 percent from the year 2010 shows how profitable overseas cooperation can be. Over the coming years the infrastructure will follow the current development of the country’s infrastructure.

I hope that the blog has given you a clearer picture on the sourcing opportunities from the metropolis capital of West China, Chengdu, Sichuan. In the time to come, Chengdu will not only be known for its very famous pandas but also for its growing significance in the service sourcing field.