China has great potential to attract giant software firms

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Last updated at: (Beijing Time) Friday, January 30, 2004

China has great potential to attract giant software firms

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Computer maker IBM announced recently that it will recruit 15,000 new staff around the globe, among which 70% will be recruited in China, India and other emerging markets. Experts say China should be able to draw on its advantages in attracting foreign software companies while at the same time developing its domestic market.

IBM and more than 200 international companies such as GM, Hp, and Motorola have all set up research and development centers in China. Professor Huang Weiping from Beijing-based Renmin University points out China's relatively low labor cost and huge market are the main attractions for large international companies coming to China.

"IBM holds that for a program with three to five years' experience, the salary in China is US$12.5 per hour, while it is fifty to sixty US dollars in America. If its research and development staff move to China, the company can save quite a lot of money. The same reason has motivated a lot of other companies to come to China and move into the market here."

But China is not the only destination territory drawing international companies. Neighboring India has also attracted many leading multinational enterprises thanks to its advantages in terms of English language, intellectual property rights, and good software education standards. Professor Huang Weiping has this to comment.

"If we compare the situation in China and that in India, we can find that when foreign transnational companies set up research and development centers in China, they in fact go through the process of developing software for the second time so as to adapt to China's market. India, however, is turning a design concept into real products so as to adapt to the needs of world market."

Compared with India, China's labor cost is cheaper and its economic growth rate is far higher. China also has better infrastructure and a better mix of industries. Professor Huang Weiping says all these are China's advantages in attracting large international companies. But in terms of long-standing development, he stresses that China should learn from India, especially by turning design concepts into products to adapt to world market rather than simply developing products for the domestic market.

"China should combine the two circumstances. On one hand, we should go in for Original Enterprise Manufacturing, so as to bring our domestic software production up to world standards. But then again China's huge market is coveted by foreign countries, so we must get into this market also, truly and firmly."

Source: China Radio International

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