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People's Republic of China

Basic information

Capital: Peking (Beijing)
Population: 1.321 bn.
Large cities: Shanghai, Nanjing
Currency: Renminbi (RMB)
Language: Chinese (Mandarin)
Government: People's Republic
Time zone: UTC+8
GDP: $ 8 bn.
Dialling code: +86
Internet TLD: .cn

Overwiev People's Republic of China:

Great potential for growth has been relased in China as the coutry’s economy is gradually being transformed and increasingly orientates itself towards becoming a market economy. In recent years, the People’s Republic of China has reported economic data which has made it the envy of neighbouring countries and competitors. China is the third-largest trading nation and the fourth-largest national economy in the world. As such, the country generates an average per-capita national output of just over US $ 2,000. 

After 25 years of economic reforms in China – a „policy of reforms and opening up“ -  the country is still in the process of building up its „socialist market economy with Chinese caracteristics“, developing from a primarily agricultural to an industry- and service-oriented economy, from a closed to an open economy. China’s joining the World Trade Orgnanisation (WTO) at the end of 2001 was a clear sign also for the Chinese public htat the country is opening up and being integrated into the international division of labour in the global economy.

Overview IT provider market:

The Chinese IT outsourcing market is in large parts still a supply-driven market, with Chinese IT outsourcing companies mainly being orientated towards the markets in Japan and the US.
Europe, however, is also increasingly being discovered as a target market by Chinese ITO companies, and further growth potential is expected in this context. Within Europe itself, it is becoming clear that Great Britain and the Netherlands are more strongly involved in offshoring than companies from Germany, Austria and Switzerland. 

It is therefore a pressing need for German companies – for IT companies as well as companies considering offshore outsourcing – to join this trend in time in order to be able to use the potentials the Chinese IT market offers and to benefit from the advantages to the same extent as their international competitors.

However, due to the increasing domestic demand, the Chinese outsourcing market should not only be viewed as a supply-driven market. Already today, all multi-national companies have invested in China and thus generate a strong demand in support services – which, of course, is being answered mainly by national Chinese companies. 

40% of all outsourcing projects are already contracted by these local companies – these contracts could, of course, also be awarded to local subsidiaries of German companies. Suppliers of these large-scale companies should definitely consider following their major customers and setting up representative offices. 

The hourly rates in China currently range between € 8 and € 25. Due to the large pool of available resources, these rates can be regarded as low to very low. This is true even for „1st tier cities“ (such as Shanghai und Peking), and an increase in these rates is not expected in the foreseeable future.

 

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