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Suzhou's Software Industry Marches Towards World Market

SIP New Electronic Information passed the authentication of the highest level – CMM15 last month, and became the first software enterprise in the municipality and second in the province to obtain this level of certification. On June 29, a delegation of Boeing Corporation made a special trip to SIP with the aim to seek cooperation partners in software, which signifies that software enterprises in SIP have acquired the capability to advance towards international software market.

The latest information from SIP Bureau of Science and Technology show that the net export of software from SIP in the year 2004 amounted to 18 million US dollars, taking up 95% of the software export volume of the whole municipality and 21% that of the province. In 2005, the amount rose to 30 million US dollars, showing an increase of 67%, and it is expected to go beyond 80 million US dollars this year. SIP is emerging with a new profile of a base in consigned software designing.

Consigned software service refers to the fact that software companies of developed countries consigns software projects to the software enterprises of those countries where HR cost is relatively low, in order to achieve cost-effective development. On the other hand, the consigned software enterprises are given the opportunity to learn from advanced managerial experience of the foreign software enterprises and train their technical teams, and improve their capability to win shares in the international market.

By the end of last year, there had been 150 software enterprises in SIP, of which some 50 are engaged in consigned software service with 60% exporting to Europe, America and Singapore, and 40% to Japan. Suzhou Software Park within SIP Int'l Technology Town, along with software parks in Dalian, Shanghai, Shenzhen, and Zhongguancun of Beijing, have been selected as experimental bases for "project of China's software export to Europe and America". Meanwhile, 7 enterprises from SIP Int'l Technology Town have been listed as experimentation enterprises for "project of China's software export to Europe and America", standing for 78% of such enterprises in the province.

Xin Yu Software, a leading software enterprise among those in the consigned software service, has a technical staff of over 450, and Xin Dian Information is the other software enterprise in SIP with staff exceeding 300. The two enterprises have maintained prominent positions in sales revenues among software enterprises.

According to prediction by influential international institutions, the volume of global consigned software will amount to 100 billion US dollars. SIP, based on its software export to Europe and America, is intensifying its efforts to win larger shares of the market, and in the next 3 to 5 years, the number of enterprises for consigned software service is expected to grow to over 100.

Currently, the market of software consignment is mostly concentrated in North America, West Europe, and Japan, and the chief exporting countries are India and Ireland, which have almost monopolized the markets in America and Europe respectively. Now, at the markets of Korea and Japan, where Chinese enterprises are having the lion's share, have appeared Indian software enterprises to vie for shares. The 5 major software enterprises from India have all entered Shanghai, China, such as the famous Infosys, to recruit Chinese technicians. The competition is an unavoidable fact. Faced with the situation, SIP has been vigorously pushing forward the work of CMMI authentication among enterprises, and reinforcing financial support to improve their competitiveness at the international market.

Last year, China-Singapore Venture Investment appropriated 200 million RMB to set up the first venture fund in SIP – Development Fund of SIP Software and IC Industrial Development in support of the medium and small enterprises. The fund invested 3.636 million RMB in 5 software projects in 2005. Specialized funds from "torch plan" of Ministry of Science and Technology, Provincial Association of Software and IC Industries, the Provincial Technical Breakthrough Plan, and Provincial Technological Research Plan, etc., are also put into the development program to foster stronger software enterprises in SIP in addition to local government appropriations.

Backup services are being made easier for software export in SIP. One-stop service, green channels are being available for software enterprises. Government administration for science and technology stipulated the policy that for every US dollar export of software, an allowance of 0.1 RMB is awarded to the exporting enterprise.

To solve the bottleneck problem of talents, SIP is going all out to introduce technological talents into SIP and perfecting the recruitment and training mechanism. A software training center has been set up in SIP to carry out 6-week training on regular basis for candidates recruited from all over the society, whereas the SIP Software Testing Center has reserved a professional team ready for "lease". Besides, a competent team of agents is being trained for obtaining orders from Japan and North America.

June 30, 2006

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