Dalian Software Park

Dalian Software Park (Simplified Chinese: 大连软件园 or Traditional Chinese: 大連軟體園) is an industrial zone, created in 1998 in the western suburbs of Dalian City, Liaoning Province, China, where many of the world's large and medium-sized IT-related companies have set up shop to do software development and information services. While American and European companies typically have gone to Bangalore and other cities in India because of the English language capability, the Japanese companies have gone to Dalian and other cities in China due to the Japanese language capability.

Dalian is one of China's 11 "National Software Industry Bases" and one of five "National Software Export Bases." Currently, more than 300 companies, including 32 Global 500 corporations, have offices in the park.

Flow of overseas IT outsourcing

The IT related work in the developed countries has become vast and has been suffering from lack of IT workers and increase of cost. The worldwide trend is now moving from domestic outsourcing to overseas outsourcing. This "IT work" is not only software development which require engineering skills (ITO), but also other business work which does not require engineering skills (BPO), such as call center and other information services.

Bangalore, India

To get solution to their IT related problems, American and European companies have typically gone to Bangalore and other cities in India where English is used in higher education, while Japanese companies have depended on India for the non-Japanese language related IT work only.

Launch of Dalian's software industry

Software development in Dalian started early and in the late 1980s. About the time Dalian Development Zone was established in the northern suburbs mainly for the manufacturing industry, Dalian High-Tech Zone was designated in the western suburbs, for the high-tech industries. During the first half of the 1990s, application software outsourcing from overseas, particularly from Japan, has increased. Dalian Hi-Thik Computer Technology Corp. (DHC), which had derived from Dalian City Computer Center, and Dalian Hisoft Corp. were established in High-Tech Zone. They were involved in application software development, outsourced from NTT Data, NEC, Hitachi Software Engineering, etc.

Dalian High-Tech Zone

Dalian High-Tech Zone was established in the late 1980s in the western suburbs, where Dalian University of Technology and Dongbei University of Finance and Economics are located, along Lüshun South Road. It is a mixed industry zone where pharmaceutical manufacturing and other plants are in the back side. Dalian's pioneering IT companies, such as DHC and Hisoft are headquartered here.

Birth of Dalian Software Park

Dalian Software Park (DLSP) was established in 1998, in the 3 km² area, in the western suburb of Dalian, near Dalian High-Tech Zone. It is surrounded by the hills on the three sides and by the Yellow Sea on the remaining side, and is an academic area where Dalian University of Technology and Dongbei University of Finance and Economics are located. Management of the Park is done by Dalian Software Park Co., Ltd., a private enterprise 100 percent owned by one of the three largest real estate developers in Dalian (Yida Group), which is considered a rare case in China, because all other software parks are managed by the local governments directly or by the organizations related to the local governments. The company provides a full range of professional services, from registration and basic property management to human resource services, to assist in the operations of the IT companies. See also "Preferential policies" below.

Its brief history

Established in 1999, Dalian Software Park is a key part of the development of the city of Dalian, a hub of the international IT industry in China. With an area covering 7.16 square kilometers, Dalian Software Park is one of the ten State-level software industry bases. Its export volume is increasing by 100 percent annually. Over 300 enterprises, including more than 60 foreign companies, have settled their IT business in the park.

As it opened officially, Neusoft Group came to this park to establish their development centers, and later established Neusoft Institute of Information. Matsushita Electric Industrial (Panasonic) was the first to enter the park, followed by Alpine, Sony and others. American and European companies, such as GE (Genpact), HP, IBM and SAP, came to establish ITO and/or BPO centers, mainly to do their Japanese subsidiaries' work. Chinasoft (headquartered in Beijing) and Xinhua were among the first Chinese-owned IT companies. Later, such Chinese-owned IT companies as iSoftStone (Beijing), New Touch (Shanghai) and Nantian (Shenzhen) also came. See also "Dalian Software Park Phase 2" below.

Its current status

Currently, there are 380 companies in Dalian Software Park (a September, 2006 survey by Dalian Software Park):
*58% Domestic Chinese companies
*42% Overseas companies
**27% Japanese companies
**15% Other Overseas companies (American, European, Korean, Taiwan. Korean, etc.)

Workforce

The IT service work done in Dalian Software Park can be categorized as follows (A 2006 survey by Dalian Software Park):
*40% Application software development
*30% Business process outsourcing
*10% Embedded software development
*20% Other, such as Drawing, IC or Printed Circuit Board (PCB) Design, R&D and Animation/Video Games

Application development is done mostly by the engineering school graduates of the universities, while embedded software development requires more technical skills in the areas, such as telecommunications or special hardware. Those workers involved in BPO varies from the middle school graduates for data entry, to the foreign language school graduates for simpler BPO work, and the returnees of overseas studies for inbound or outbound call center/contact center work. To emphasize the importance of information privacy, Dalian City Software Industry Association has recently implemented, in cooperation with [http://www.jipdec.jp/eng/ Japan Information Processing Development Corporation] (JIPDEC), a city-wide PIPA (Privacy Information Protection Assesment) program.

Dalian geography

Dalian City is located in the southern tip of China's northeast region. It is surrounded on the three sides by the Yellow and Bohai Seas, and is known for a relatively mild climate in this region with otherwise severe winter. It has direct air flights to the major cities in China, to Seoul in South Korea and to nine cities in Japan.

Dalian has a population of about 6 million. It is the most developed city in the northeast region, where the best talents of the 130 million people seek jobs.

IT capability and English, French, Japanese and Korean language ability

Most of the IT workers come from the engineering schools of the universities in Dalian and other cities in Northeast China. In Dalian, there are Dalian University of Technology, Dalian Jiaotong University, Dalian Maritime University, and Neusoft Institute of Information which is within the Park. In other cities, there are Northeast University in Shenyang, Jilin University in Changchun, and Harbin Industrial University in Harbin. Workers with English ability come from the various universities where English is predominantly their first foreign language, but they lack the experience of the Indian university graduates with working knowledge of English. There are also the English-speaking returnees of study abroad, typically to U.S., Canada, Australia, New Zealand and Great Britain. French speaking workers are from Dalian University of Foreign Languages (DLUFL, 100 graduates each year), Liaoning Normal University (LNNU, 30 graduates each year) or the returnees of study abroad, typically in France and Quebeck, Canada. L'Alliance française, France's worldwide network of French language education, is located at DLUFL. Dalian is particularly unique in the fact that there are many workers with Japanese language ability due to various historical facts:
*The southern half of the present-day Dalian City was a Japanese occupied territory, 1905-1945
*Dalian University of Foreign Language was established in 1963 as the center of Japanese studies in China
*Since the late 1980s, many Japanese companies have established manufacturing subsidiaries and have been employing Japanese speaking Chinese. Another factor contributing to the Japanese language capability in Dalian is the presence of about two million ethnic Koreans. most of whom live in the Northeast. Many use Korean at home and as the medium in their schools; Japanese is a popular choice for those who study a foreign language, due to the similarities between Japanese and Korean. The Korean language spoken in China's Northeast region is said to be akin to that of North Korea, but, after some training in polite business and originally English technical words, they can speak with good South Korean accents.

Preferential policies

The preferential policy of the State to the overseas high-tech companies, such as corporate income tax exemption during the first two years of business establishment and 50 percent tax reduction in the following three years will expire within 5 years from 2008, although reduced tax rate of 15% (not at 25%) for high-tech companies will remain. The preferential policy of Dalian City can be summarized in the following points:
*The university graduates who have sought high-tech jobs are given the Dalian City residence right
*Since 2004, the software development companies in Dalian Software Park or Dalian High-Tech Park are allowed to pay reduced amount of contribution to the retirement funds (allowance)
*The employees of such companies in such locations are given income tax reduction

Dalian Software Park Phase 2

The construction of Dalian Software Park Phase 2 was begun in 2003 as part of the City Government's "Dalian Software Industry Belt Along Lüshun Southth Road" Project, in a 12 km² area, immediately west of Dalian High-Tech Zone.
* A joint venture betrween Ascendas Pte. Ltd. of Singapore and DLSP completed a large office building for occupancy in September, 2007 (Dalian Ascendas IT Park)
* Neusoft Group is completing its second Neusoft Park office complex in 2008
* A joint venture between DLSP and Shui On Group of Hong Kong will open Dalian Tiandi Software Park and related commercial area in 2009. In September 2007, it was announced at the ceremonies commemorating the start of the construction that Dalian-based Yida Group and Hong Kong-based Shui On Group are to invest a total of 15 billion yuan (US$2 billion) and that the annual revenues of 10 billion yuan (US$1.33 billion) will be generated at the park after the completion of the second phase.

Its future

ervice outsourcing base along Lüshun North Road

It was announced in June 2007, that a Dalian International Service Outsourcing Base will be created at Dadonggou, on Lüshun North Road, about ten kilometers west of Dalian International Airport.

Expanding to other cities in China

Based on its experience of success so far, Dalian Software Park has decided to build other software parks, in cooperation with the local hi-tech committees:
*Wuhan, Hubei: Wuhan "Optical Valley" Software Park is ready for occupancy since April 2007. Wuhan is in the center of China's population distribution of 13 million.
*Suzhou, Jiangsu: Suzhou Software Technology Park in Suzhou Hi-Tech Park SND, located in the western suburbs of Suzhou City, on Taihu Lake, nearer to Wuxi International Airport, will be ready for occupancy from December 2007.
*Tianjin: Tianjin Binghai Service Outsourcing Base, to be built on the Bohai Sea side of Tianjin Economic & Development Area (TEDA), will be ready for occupancy from December 2008.

Other Chinese cities are to be added.

IT-related companies and organizations in Dalian

In Dalian High-Tech Zone

*Managed by Dalian Hgh-Tech Zone Management Committee
*American companies: BearingPoint, Citibank, Dell, etc.
*Chinese companies: DHC, Hisoft, etc.
*Japanese companies: HAL Film Maker, Jtekt, MI Communication, etc.

In Dalian Software Park

*Built and managed by Dalian Software Co., Ltd.
*American companies: Accenture, Fidelity Investments, Genpact (a GE company), HP, IBM, Oracle Corporation, etc.
*Chinese companies: China Software & Service (CS&S), Neusoft Group, Neusoft Institute of Information, New Touch, etc.
*European companies: British Telecom (UK), SAP (Germany), Oostsourcing (A joint venture of Akyla 40%, Better Be 40%, Insight 20%, Netherlands)
*Japanese companies Alpine, Fujitsu Device, Hitachi, NEC, Panasonic, OMRON, Sony, Sumitomo Wiring Systems, Yokogawa Electric, etc.
*Other companies: Satyam (India), Wistron (Taiwan), etc.

In Dalian Software Park Phase 2

In Dalian Ascendas IT Park

*Built and managed by Dalian Ascendas Co., Ltd., a DLSP-Ascendas joint venture
*Konica Minolta, DHC, Lüshun South Road Software Industry Belt Demonstration Room, etc.

In Dalian Tiandi Software Park

*Built and managed by a DLSP-Shui On Group joint venture
*To open in 2008

In Other parts of Dalian

*There are IT companies and organizations that are located in other areas of the city.
*Dalian InfoMedia, With System, Sumisei Computer System, NHN Corporation (Korea), Dalian City Bureau of Information Industry, Dalian City Software Industry Association, etc.

History of the IT industry in Dalian

*1992: Dalian Computer Center (DCC) of the Dalian City Government received an order from NTT Data to do application software development.
*1996: DCC split one of its departments to found Dalian Hi-Think Computer Technology Corp. (DHC, Nov.) Dalian Hisoft Corp. was founded (Nov.).
*1998: Groundbreaking of Dalian Software Park (June).
*1999: Official opening of Dalian Software Park (July). Neusoft Group opened a Dalian development center (July). Singapore's BHR-Frontline opened a Dalian development center, as the first foreign company in this Park.
*2000: Northeast University's Neusoft Institute of Information started. (Sept.).
*2001: Japan Information Service Industry Association (JISA) and China Information Industry Association had their 5th joint meeting in Dalian (July). Panasonic opened its development center, as the first Japanese company in the Park (Sept.).
*2002: DHC became No. 1 in China's Software Export Ranking.
*2003: Dalian City announced the "Lüshun South Road Software Industry Belt" plan and the groundbreaking ceremonies of Dalian Software Park Phase 2 were held (June). The First China (Dalian) International Software & Information Service Fair was held (July). IBM, Accenture, CSK and others entered the Park.
*2004: HP, SAP, OMRON and other companies entered the Park.
*2005: The First China-Japan Embedded Software Seminar was held and a T-Engine demonstration room was established (June).
*2006: Chinese Ministry of Commerce gave Dalian City an "International Business Outsourcing Base" recognition.
*2007: Opening of Dalian Ascendas IT Park (Sept.). Groundbreaking of Dalian Tiandi Software Park (Sept.).

References

* [http://www.dlsp.com.cn/english/About%20Dlsp/about_his.asp The History of DLSP]
* [http://www.dhc.com.cn/en/about/milestones.jsp The Milestones of DHC]
* [http://www.hisoft.com/About/History.asp The History of Hisoft]

Other cities in China

There are 30-50 City-level, Province-level and National-level software parks in China. There are eleven National level software parks, in: Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Shanghai, Xi'an, and others.

A brief look at these cities are:
*Shanghai: Being the commercial center of China, the world's key IT industries have opened marketing and systems engineering centers, in its downtown or in such areas as Zhangjiang Hi-Tech Park in Pudong.
*Beijing: China's IT industry was "born" in Zhongguancun, near Peking University and Tsinghua University. The world's many IT companies have set up development centers, particularly research centers, due to availability of excellent universities in Beijing. In the north of Zhongguancun is also Zhongguancun Software Park.
*Chengdu and Xi'an: These inland cities are where key universities moved during the Sino-Japanese War. China's space exploration bases are nearby, and there are strong electronic industries. [http://www.tfsv.com Chendu Tianfu (Heavenly City) Software Park] has IBM, while [http://www.xasoftpark.com Xi'an Software Park] has Fujitsu, NEC and a joint venture of UFIDA Software (Yongyou) and NTT Data.

ee also

*Silicon Valley, US
*Silicon Fen, UK
*Silicon Wadi, Israel
*Yokosuka Research Park (YRP) and Kansai Science City, Japan
*List of technology centers of the World

References

*Thomas L. Friedman, "The World Is Flat: A Brief History of the Twenty First Century, Updated and Expanded" (New York: Penguin Books Ltd., 2006)The following references are written in Japanese:
*Kenichi Ohmae, "China Impact" (Tokyo: Kodansha, 2002)
*Rin Katoku, "Dalian on Fire, A Story of Software Development in Dalian" (Tokyo: SCC, 2005)
*Overseas Software Purchasing Association, "A Guide to Offshore Software Development in China," (Computer-Age-Sha, 2005)
*Naotaka Ohwada, "IT Power of China and India, A 10 Million Strong Elite Group Engulfing Japan," in "Nikkei Computer" Magazine, May 2, 2005
*Mitsuhiro Seki, "The Educational-Industrial Complex in China," (Shinhyoron, 2007)

Further reading

* [http://query.nytimes.com/gst/fullpage.html?res=990DEEDF1E39F937A15755C0A9629C8B63&scp=1&sq=Dalian+Software+Park&st=nyt Doing Our Homework] by Thomas L. Friedman in the New York Times on 2004-06-24
* [http://www.asocio.org/file/Introduction%20to%20Dalian%20Software%20Park%20(DLSP).pdf Introduction to Dalian Software Park] Asian-Oceanian Computing Industry Organization
* [http://dalian.runsky.com/homepage/english/biz/poi/userobject1ai419634.html Dalian Software Park] DalianNews.com 2004-03-17
* [http://www-304.ibm.com/jct03001c/services/learning/ites.wss/zz/en?pageType=page&c=a0008608 Dalian Software Park accelerates workforce development with IBM education solution] IBM Case studies: Dalian Software Park - Learning Solutions

External links

* [http://www.dlsp.com.cn Dalian Software Park] (DLSP)
* [http://www.yidagroup.com Yida Group]
* [http://www.daitp.com Dalian Ascendas IT Park]
* [http://www.spcs.com.cn/en/ SoftPark Consultancies & Services] (SPCS)
* [http://www.dhc.com.cn/en/ Dalian Hi-Think Computer Technology Corp.] (DHC)
* [http://www.hisoft.com Dalian Hisoft Corp.]
* [http://www.neusoft.com.cn/en/ Neusoft Group Ltd.]

* [http://www.dlhitech.com Dalian High-Tech Zone]
* [http://www.dlbii.gov.cn Dalian City Bureau of Information Industry] (DLBII)
* [http://www.dlsia.org.cn Dalian City Software Industry Association] (DLSIA)
* [http://www.cisis.com.cn China (Dalian) International Software & Information Service Fair] (CISIS)

* [http://www.dlufl.edu.cn Dalian University of Foreign Languages]
* [http://www.lnnu.edu.cn Liaoning Normal University]
* [http://www.dlut.edu.cn Dalian University of Technology]
* [http://www.dlmedu.edu.cn Dalian Maritime University]
* [http://www.djtu.edu.cn Dalian Jiaotong University] (formerly, Dalain Railway Institute)
* [http://www.neusoft.edu.cn Neusoft Institute of Information, Northeast University]
* [http://www.dlpu.edu.cn Dalian Polytechnic University] (formerly, Dalian Institute of Light Industry)

* [http://www.ovsp.com.cn Wuhan "Optical Valley" Software Park]
* [http://www.snd.gov.cn Suzhou Hi-Tech Park SND]
* [http://www.investteda.org Tianjin Economic & Development Area]
* [http://www.tfsv.com Chengdu "Tianfu" Software Park]
* [http://www.xasoftpark.com Xi'an Software Park]
* [http://www.zpark.com.cn Zhongguancun Software Park]
* [http://www.zjpark.com Shanghai Zhangjiang Hi-Tech Park]