From a major production and manufacturing player, China strives to develop outsourcing managed services as key export products, Economic Information Daily reported.   Outsourcing refers to corporate efforts to purchase services provided by third parties to finish internal projects. It is not limited to transferring internal projects to external parties. It also include how corporations cultivate more complicated division of labour structure and give rise to various services sectors include logistics, software and financial outsourcing.   Currently, the global outsourcing market worth around 3000 million to 5000 million US dollars and it continues to grow at 20 to 30 percent annually. By 2008, its market value is estimated to exceed 10000 million US dollars. Since 2003, China has been trying to attract foreign corporations to outsource in the country. Though it is still far behind the international average, the outsourced product export amounted to 10.9 percent of the total export in 2005.   Expand export products varieties Developing outsourcing is a practice to readjust the export structure from majoring in agricultural and low-priced products to technology- and service-oriented products.   Outsourcing sector attracts great attention from senior government officials and economists not only because of its great economic advantages but also the potential structural adjustments it can bring to China’s economic system. It may be the solution for many existing structural problems China suffers.   Li Zhiqun, a minister with foreign investment management office at the Ministry of Commerce, said that outsourcing and offshoring of foreign corporations in China is a new way of to develop trade and export. At the same time, since foreign outsourcing facilities in China require quality labour, it can help develop more educated and well-trained labour particularly in finance and information technology sectors.   Chinese economists generally think that while outsourcing services sector can naturally develop more fields for foreign investment and accelerate healthy capital flow, it can raise the local professional services level and lower operation cost that in turn create a better investment environment for foreign companies.   Potential and setbacks Li added that China has five main areas that are to the country’s advantages in developing outsourcing services sector: First, political and social stability ensure continuous improvement of investment environment as well as the gradual opening of market; Second, the increase of tertiary educated labour provides sufficient human resources; Third, China’s position of a global manufacturing centre give rise to the increasing demand for modern services; Fourth, transport and telecommunications infrastructure are well-developed in urban areas; Fifth, China’s economy continues to grow at fast pace.   Wang Bo, vice-president of Accenture Dahua, commented that China’s rapidly expanding economy provides both internal and external demand for outsourcing services packages and the continuous improvement of transportation system in secondary locations consolidate the foundation for outsourcing facilities.   However, experts also pointed out that China suffers from setbacks to fully unleash the country’s potential of outsourcing services include the lack of foreign language and business expertise among graduates from tertiary institutes, lack of government incentives as well as centralized planning, research and promotional activities.   Combination of “China Services” and “Made in China” Chinese government to launch a series of measures to encourage the development of outsourcing services sector. The Ministry of Commerce plans to invest 1 million yuan every year to construct 10 bases for outsourcing services sector and promote 100 multinational companies to transfer some of their outsourcing businesses to China. At the same time, 10 large-scaled outsourcing services consultancy firms would be formed to provide well-rounded support for foreign outsourcing facilities. The execution would combine market operational method together with government directions.   Officials with the Ministry of Commerce said that the government would work on several areas to improve the environment for the proper development of outsourcing services sector: First, the government would target certain provinces and cities as potential outsourcing bases, investing in their infrastructure construction; support and funding would be provided to outsourcing services sector in order to help train quality human resources that the sector lacks; Third, protection over intellectual property needs to be strengthened.   Japan, Korea, America and Europe have become China’s targeted market. System management and maintenance, information technology support, data processing, software development, purchasing and logistic services are the key areas China wants to place emphasis on. Through internationalization and modernization, the country wants to have an equal share of the global outsourcing services market.