Daily Observations from the 2012 International Services Outsourcing Conference, Changsha China.
As a member of the Sourcing Interests Group (SIG) delegation attending the 3rd Changsha International Outsourcing Conference in Changsha the capital of the Hunan Province I will share the experience and my observations with our audience over the 3 day event.
Sleeping Giants Everywhere.
After arriving the evening before the conference, I was struck by the sheer development of this so called “smaller” city within China. The scale of this country is quite awesome and to think that Changsha, not really a household name, it is a city within China that boasts:
A Population over 7MM
In 2011, Changsha’s GDP has reached a total of 561.93 billion Yuan, an increase of 14.5% over 2010.
Sum GDP of Changsha ranked the 7th of China’s capital cities
Has close to 50 Universities
The city blends the over 3000 year ancient history with the skyline filled with construction cranes atop what seems like every building along the Yangtze River. However, amongst all this growth and innovation lies an entrepreneurial spirit and desire to succeed that is limited by only by its own learning potential.
What was clear from the regional delegate companies of Changsha was an unquenchable desire to learn how to grow and expand their businesses internationally. What was also apparent was that these companies lacked understanding of very basic Western business knowledge. Rudimentary business concepts applied by Western Businesses pertaining to such areas as; business management, human resources, and selling to global 1000 type customers was the prevailing acumen of the delegates. Many that I spoke to had not traveled outside of China in their lives, yet desired to be global in scope.
Recent “Business” Graduate Climate
The best way I described the delegates from Changsha’s services business community during my panelist discussion was that Changsha is the recent college student who just graduated and is ready to go. Rich with enthusiasm and desire but light in experience and credibility. How does a company with so much spirit to be successful and with overwhelming confidence in their ability to deliver, penetrate the global marketplace? The consensus answer was it was going to take time. Like the college grad, it’s only entry level jobs and building a resume of success that will get you promoted. Not many graduate and get hired as the CEO unless you’re starting your own company. The important part, however, to recognize is that with it’s sheer mass, China will mature on an accelerated time table. Using it’s own internal business base as a source of building its scale and experience, the companies will be able to compete with and and all global players within a short t period of time.
Cultural Risk Differences
The Changsha delegation was also introduced to this concept of risk mitigation for the Fortune 500 sized buyers. Culturally in China the “contractual agreement” is typically the binding agent for any deal. ” I have something you need we agree and sign. There is very little in the way of corporate supplier due diligence on the selection of suppliers in China in the same way western, and more so North American, companies do before making decisions to selecting a strategic outsourcing vendor.
The day was full of interesting cultural, culinary and business aspects. Tomorrow we will be educated on the different business offerings available in business services outsourcing within Changsha. I trust you’ll check back in.
Learning the Changsha Business Market
The second day of the conference kicked off with two segmented presentations by local Changsha Businesses who are seeking to bring outsourced services to North America. Delegates were provided insights to companies from Changsha segmented into two areas; Service Providers and businesses from the Qing Zhu Lake Eco-Tech Zone. HCMWorks attended the Service Provider breakout sessions. We were presented from 6 service based companies ranging from innovative software development, to eBook documentation creation and cartoon animation services.
As noted in day one, we saw a diverse range of business maturity from the presenters and a broad variance of services offered. The summarized observation from these presentations was that innovation and spirit, that was contagious on Day 1, was continued. However, the organizations still have a ways to go before they are organized in such a way to provide the required confidence that larger Fortune 500 companies demand. We didn’t see any representation of corporate readiness that would enable these companies to bring enterprise scale to the Western market today. Smaller projects will be the near term test of these Chinese outsourced providers. Our view is that China is experiencing very similar attributes to that of the early India outsourcing days. They are rapidly mobilizing to provide centers of excellence that global businesses can rely upon to provide outsourced services but still lack the maturity to win large-scale enterprise engagements. Providers demonstrated business cases of work currently being performed but nothing on the size and scale that the mature global outsourcing providers due today. But if you read our Day 3 observations, you will see that this could rapidly change.
The day then moved into smaller selected 1:1 meeting presentations where the SIG Delegates were offered the chance to meet with 4-5 companies for a 1 hour session. These sessions were met again with enthusiastic questions from the Changsha businesses feverishly trying to understand what their companies had to do to position themselves as credible outsourcing alternatives. The openness and desire to absorb the information provided by all delegates continued to support the humble approach these companies are taking to learn and ensure success.
The day was closed with a formal dinner hosted by the Deputy Mayor of Changsha and all the delegates. A beautiful and fascinating experience of local Chinese culture that welcomed and thanked the delegates to the Changsha City. Local Chinese dinner formalities, toasting and cuisine was provided with full fanfare.
Site Visits. Seeing & Believing
Early Saturday morning the complete delegation boarded a bus and were taken to 3 corporate development parks to visit a various range of businesses locations. There is no doubt that the construction of these corporate business parks are taking on the size and scale that would impress any business executive. The Chinese government is certainly investing in a way reminiscent to the movie Field of Dreams embracing the “if they build it, they will come” approach to the global market. The one corporate park we visited that gave us a view of their small scale model (about 50ft X 50ft) of the future corporate park, reported having over 1000 new companies enter their current development in 2011. This corporate park (1 of approximately 20+ like it) are being built in the surrounding area much like a speculative residential sub-division, these corporate parks have business lots open and will build to client exact size and internal specifications on a wide range of square meters/feet.
We also visited more remote parks that are on the outskirts of the city and have not had the infrastructure of residential, commercial support services and public transportation brought to those areas but are clearly being readied for the future. All delegates were impressed by the tour of the Green Apple Company who specializes in document scanning and eBook creation services. We walked into a converted exhibit center with over 1300 work stations converting publications from old printed formats to eBook and electronic formats in over 6 different languages. The Green Apple Company warmly greeted the delegates and professionally presented the efficiency and technology that enables them to deliver this process on a faster and more efficient process than other outsourced markets.
Finally, delegates were given a tour of the city along with a visit to a local marketplace and capped off with a local governmental visit to the Riverside Palace for the weekly public riverside fireworks display and a spectacular show of traditional Chinese music, dance, acrobatic and vocal entertainment spanning the cities 3000 year history.
This 3 day conference was coordinated by Royal Du of Clochase and his team in concert with the Commerce Bureau of Changsha. The attention to detail and optimization of content was expertly executed. The services provided to ensure that all delegates were not only provided the knowledge they came to seek but to experience the rich and exciting culture of Changsha was perfectly executed. If you are interested or have a market interested in Chinese business, we highly recommend you look to put this conference on your 2013 calendar.