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September 28, 2015

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Home » City specials » Hangzhou

Outsourcing summit delves into tech issues

By Xu Wenwen | September 28, 2015, Monday | Print Edition

HANGZHOU has for the past three decades been a magnet for overseas companies that want to outsource work.

Since the 1980s, Hangzhou companies have received outsourcing work from Japanese enterprises including Panasonic. Despite turbulence in the global economy and a falling yen, the amount of work outsourced to Hangzhou firms continues to increase annually. Between January and August, business activities were valued at 460 million yuan (US$72 million), compared to 429 million yuan in the same period last year. The figure is stronger than it appears because the yen depreciated 40 percent against the yuan during the period.

Because of the mature market and rich experiences of producing high-tech products for Japanese brands, “Hangzhou’s outsourcing enterprises are among the most competitive that serve the Japanese market,” said Zhong Mingbo, chairman of the Hangzhou International Service Trade Association.

Hangzhou’s standing within the industry has made it possible for the picturesque city to host the ChinaSourcing Summit for three consecutive years.

This year’s summit was held last week. Over 800 analysts, buyers and sellers from more than 10 countries and areas including the US, UK, Italy and Norway participated in the three-day event.

Co-sponsored by the Ministry of Commerce, the Hangzhou government, the China Council for International Investment Promotion, and the Hangzhou Commission of Commerce, this year’s summit theme was “Internet+: Driving Business Value via Digitalization.”

The information technology sector outsources a considerable volume of work, which made the “Internet+” theme especially significant for this year’s summit.

“The digital and physical worlds are increasingly blurred,” said Kristian Steenstrup, vice president of research firm Gartner Group, during his keynote speech. “Thus new business designs were created.”

Gartner senior consultant Li Changhua cited examples of its clients like a bank using a robot to do basic business, a pharmaceutical company that invented a “smart pillbox” to tell patients when to take certain pills, and dust bins on streets equipped with sensors so rubbish can be collected before it stinks.

More than just goods

It is estimated by 2020 the Internet of Things (IoT) market will be worth US$1.7 trillion and there will be over 38 billion personal IoT devices in the world.

China is staking its claim as an important buyer and seller in the outsourcing industry. From January to August, the country carried offshore outsourcing business valued at more than 30 billion yuan, up about 30 percent from the same period last year.

During the summit, Hangzhou also hosted the Cross-border E-commerce Service Innovation Seminar.

“Today cross-border e-commerce involves more than goods, it also involves services, which has so much potential to grow,” said Tong Guili, a member of the Standing Committee of the CPC Hangzhou Committee.

Last year Alibaba initiated an experimental cross-border e-commerce zone in Hangzhou. It is now home to 80 e-commerce enterprises, and boasts 300 overseas e-commerce platforms offering both goods and services. Between January and June, the transaction amount reached 1 billion yuan.

“In China there is huge potential for cross-border e-commerce,” said Zhou Lan, deputy general manager of the cross-border B2C department of Alibaba Group. “China’s middle-class are interested in foreign goods and it is estimated that by 2020 there will be 600 million middle-class people in China.”

Scott D. Williams, vice president of the American Chamber of Commerce in Shanghai, agrees that there is considerable room for growth.

He emphasized that “American enterprises need to come to the Chinese market” because of the huge potential.

Williams also shared an example that when fashion brand Gap planned to open stores in China it checked data on Tmall, an online B2C platform of Alibaba, to determine the best cities for outlets. Gap is now planning to use that model in the United States.

Lu Hongxiang, chairman of Jumore E-commerce’s board, said e-commerce can benefit the traditional economy.

For instance, a machine manufacturer ordering plastic through Jumore pays a deposit. The platform pays the rest (while holding the goods’ ownership). Users only have to pay once the products are sold.

Jumore now has thousands of online sellers and buyers. It uses big data to predict price fluctuation risks, minimize storage and logistics costs, and seek investment for its clients.

Hangzhou


 

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