Wednesday, September 3, 2008

Ten reasons to have a BPO presence in China

By: Russ Sandlin
Benprise LLC

(Issue Details:July 2008).

Ten reasons to have a BPO presence in China:

  1. The People’s Republic of China is the gateway to high-end value chain work available now in Hong Kong, Singapore and Taiwan. A mainland China presence allows a BPO operator to take advantage of ancient ties to Taiwan, Singapore and APAC. High-end KPO, ITP and BPO work demand is high in these markets, and the mainland is the best place for these countries to export their work. As China become the manufacturing hub for Asia over the last twenty years, look for China to use the same attention to efficiency to become the BPO destination for Asian Chinese-speaking countries.
  2. China has a large, skilled population of workers who have mastered or grew up hearing and speaking Japanese and Korean. BPO’s are growing and moving into Dalian, in the north-east which has been traditionally either a part of the Korean, or the Japanese empires for over half of the last 500 years. Look for Dalian and other eastern cities to take on more R&D, ITO and high-end BPO work for Korea, Japan and the rest of the developed world over the next five years.
  3. The Chinese domestic market is the largest, mostly untapped market in the world. A strong presence in China provides a beachhead for companies to make the potential of the Chinese markets a new growth stream for revenue.
  4. China has more engineering graduates than any other country on the planet. I recently met with the CEO of a large BPO/ITO company in China that is exporting engineers to work in India. The strong technical base of employees in China is one of the factors that makes the Global Outsourcing Report 2005 predict China will dislodge India as the top BPO destination by 2015.
  5. Strong infrastructure: Chinese motorists complain of traffic, which I compare to the traffic of Waco, Texas at rush hour. They have wide, well planned roads, first-class rail lines, planned airports and mass transit that is the envy of the world. That’s just on the transportations side. Getting fiber and redundant power is not a problem, and the business parks popping up like mushrooms all over the country give considerable concessions to foreign investors bringing BPOs into China. Getting past the censors on the internet which slow down bandwidth a little, the scale and throughput capacity of their network is amazing.
  6. Innovation: people do not consider China as innovative, more of a copycat country. I encourage one to look at the entire history of China: where would we be without the compass, gunpowder and irrigation, all invented in China? China is now in the vanguard for mobile technology, and look for China to take the lead in environmental initiatives, alternative fuel initiatives, mobile technology and R&D in the food and pharmaceutical sectors. They are not just copycats. The diaspora of Chinese engineers returning to the mainland, coupled with the large numbers of annual engineering graduates, creates a crucible of innovation in China over the coming years.
  7. Work ethic: Thomas Friedman spoke of the Zippies in India today, who are impressive indeed. China has just as many, and they are working 18-hour days creating companies like Inc., Corp., and Maxthon International Ltd. to name just a few. These companies, as detailed in Rebecca A Fannin’s Silicon Dragons, will not only be super-starts in Asia, but will rock the foundation of US-based companies with their innovative new twist to the US high-tech company.
  8. China’s command of English is going to improve year over year. In September of 2008 there will be an influx of English-speakers hitting the job market at the close of the Olympics, allowing China to become a voice-contact call center destination for the first time at scale for English-speaking customer-base companies.
  9. Central Government has awesome power. Any government that can mandate and enforce something like the “one child policy” is capable of doing nearly anything. The government wants to work up the value chain with the economy, moving away from low-end manufacturing. They recognize English is necessary in order to capture more of the offshore outsourcing market share. Look for a more pronounced government policy mandating English education in the coming years.
  10. The Sichuan earthquake served as a national event that at once changed the nation. An unparalleled transparency in news coverage followed as China coped with the massive disaster and loss of life. Look for more government openness and transparency as a result of this massive tragedy.

And 5 things to worry about:

  1. Going at it alone: China still has challenges with different business structures, codes and tax laws, sometimes in conflict with one another, from province to province. For now, it is a good idea to have a partner, either with a co-location, JV, or a purchase, retailing the legacy team in minority status to carry on the methods and procedures to remain legal within PRC.
  2. Intellectual property; the laws governing IP are lax, or in many cases, lightly enforced. Steps should be taken to secure your IP as this gets sorted out.
  3. When compared with India, PRC lags far behind in spoken English language. Many more English speakers will become available at the close of the 2008 Olympics in August 2008, but for now, corporate English training and importing English speakers from other locations such as India and the Philippines will be necessary to supplement any voice campaigns of size.
  4. Bandwidth concerns; sensitivity with what is coming into, and going out of China, especially video media, slows down data transfers. Look for this to become more of a challenge up until the close of the Olympics as the PRC attempts to screen potentially provocative negative propaganda from being transmitted out of the country before the Olympics.
  5. Chinese culture is rich, and full of many wonderful traditions. However there are other “quirks” of acceptable behaviour in the PRC which would be frowned upon in the west. Expelling of phlegm, and slurping of noodles come to mind. It takes a little time to get used to, but it won’t kill you.

About the Author

Russ Sandlin is the COO for Benprise LLC. Russ started out in telephones in the early 1980s while attending the University of Delaware and worked his way up in the leading call centers of the United States. Russ was assigned Call Center CTI Dialer projects, Fair Isaac Behavioral Scoring and Adaptive Control modeling early in his career, and later managed large contact centers for Barclays PLC, HSBC, Chase Manhattan, Bank of America, AT&T and Dell. Since then, Russ has helped US-based investors move their work offshore setting up contact centers in Korea, Mexico, Dubai, Qatar, Pakistan, India, the Philippines and Ghana. Russ is an industry expert in offshore outsourcing, BPO, KPO and contact centers; he has a passion for CDM projects to lower greenhouse effects on Planet Earth.

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