Report on the Fifth China (Chengdu) International Software Fair, CHINASOFT 2007
■Overview of the Software Fair
The Fifth China (Chengdu) International Software Fair, CHINASOFT 2007, was held in Chengdu, Sichuan Province, China, between April 19 and 21, 2007. This is the fifth international software fair to be held in Chengdu this year. About 60 corporations such as IBM's Global Service Delivery Center in Chengdu, the Neusoft Group, and Chengdu Dianfeng Software exhibited at hundreds of booths.
Chengdu is said to currently have a shortage of about ten thousand software workers, and the recruiting event held as part of the Software Fair reflected how much effort each corporation is putting into securing personnel. Also, the universities in Chengdu are enhancing the education that they offer by offering software training courses, so as to boost the number of skilled personnel.
■Japanese delegation at press conference
During the course of the Software Fair, the local media was given the opportunity to interview the Japanese delegation, and two members of the delegation, Taro Okada, President&CEO of Aethera & Company Limited, and Mr. Tetsuo Sakai, President & CEO of KOBELCO SYSTEM CORPORATION, introduced their respective companies and offered their views on the positioning of Chengdu in their offshore development. The press conference ran for more than two hours, reflecting the high level of interest in the arrival of Japanese companies in Chengdu.
Some of the more pertinent questions posed by the press, and the responses given by the delegates, were as follows.
| Mr. Sakai: | "Chengdu maintains its relative cost advantage over coastal areas. When I recently visited Bangalore to examine labor costs, I found that costs there were higher than in the Chinese coastal areas. And in Chengdu, labor costs are lower than in the Chinese coastal areas, so overall Chengdu is extremely cost-competitive." |
| Mr. Okada: | "Chengdu offers huge cost advantages over Chinese coastal cities like Dalian, and not many Japanese companies have set up here yet, so I think there is a large potential for growth. But, the degree by which we can increase our project management capabilities over the next three years will be a key factor." |
| Mr. Sakai: | "European and American companies such as Microsoft and IBM have already expanded their businesses in Chengdu, so it is fair to say that Japanese companies are latecomers to the region." |
| Mr. Okada: | "It is a fact that we are behind European and American companies in setting up in Chengdu. Considering that there is only a very small Japanese presence here, I think that this presents our company with an excellent business opportunity." |
| Mr. Sakai: | "I believe that we will consider expanding our operations in Chengdu in the future, but the biggest issue is communication. Compared to Bangalore in India, China uses a writing system that is much more familiar to Japanese, so I think it's easier to communicate." |
| Mr. Okada: | "Many of the failures in outsourcing in China are caused by the fact that Japanese companies do not try to communicate closely with the local personnel, believing that they have a shared understanding by virtue of using the same Chinese characters. A particular issue related to expansion in Chengdu is securing personnel who are familiar with Japanese business processes and who have highly developed project management capabilities." |
| Mr. Sakai: | "China accounts for no more than 5% of KOBELCO’s outsourcing, with a minimal proportion of that going to inland China. I'd like to consider expansion in Chengdu in the future, given that it offers such excellent cost advantages. Right now, we plan to expand our outsourcing by focusing on the software businesses of the partners of Kobe Steel Ltd." |
| Mr. Okada: | "In fiscal 2007, we plan to expand our businesses by focusing on BPO services in cooperation with our partners in Chengdu. The Chinese market still exhibits considerable variation, so we intend to expand our businesses by evaluating them one by one." |
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