Global service centers moving to Chengdu
Updated: 2011-09-19 08:07
By Li Yu (China Daily)
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The 2011 China Shared Service Organization Seminar was held in Chengdu Tianfu Software Park. |
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The Chengdu Tianfu Software Park is a national-level software industry base in China. |
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Chengdu Tianfu Software Park is growing as more companies move inland for lower costs. |
With shared service centers increasingly used by multinational companies to serve a range of their departments, a seminar organized by the Chengdu Tianfu Software Park from Sept 15 to 16 promoted the benefits offered by the southwestern city.
Most Fortune Global 500 companies today have various forms of such centers to serve various departments.
In Europe, 50 percent of multinational companies have or are establishing shared centers.
In the past decade, China has become the new focus for offshore shared services. But decision-makers are increasingly faced with challenges in the nation's coastal first-tier cities - the rising cost of labor and land, as well as intensified competition for talent.
As a result, inland cities are moving into the field. They offer abundant human resources, appealing policies and a good industrial and living environment.
More than 100 managers - including those from GE, Henkel, APL, Yum!, Wilmar, Maersk, Lafarge and Bayer - joined experts and representatives from the industry in Chengdu to discuss the latest trends, prospects and challenges in shared services.
They visited Chengdu Tianfu Software Park to explore the reasons Fortune Global 500 companies are increasingly moving their service centers to southwestern China.
A survey by Ernst & Young in April showed there were more than 450 shared services centers in China in the financial, manufacturing, services, telecommunications and transport industries.
The number of foreign-invested shared service centers accounts for 47 percent of the total.
During the two-day meeting, Hackett Group Vice-President Tom Bangemann, rated by HRO Today magazine as a "HR superstar" for three consecutive years, hosted a training session on organizational structures and management, site selection, performance management and expanding the scale of shared service centers.
In addition to Bangemann's talk, managers from APL, Henkel, Lafarge, Corning, ZTE and Nordic International Management Institute made presentations about global knowledge and local experience, revealing insights into the development of shared service centers.
Advantages
When the Chinese government released a plan for the Chengdu-Chongqing Economic Zone in June, development in the region entered a new stage.
Chengdu ranks No 1 of the world's fastest growing cities in the next decade, according to a research report made by Forbes magazine, and the top destination for US investment, said the US Chamber of Commerce.
It has now attracted more than 200 Fortune 500 companies.
In July, Chengdu was rated among the world's 15 best emerging business cities by Fortune magazine.
Human resources play a large role in the ratings.
Chengdu offers high-quality human resources as a result of its 51 universities and colleges that have graduated more than 2.2 million professionals and skilled workers.
As well, the city's quality of life attracts talent from other places.
Each year, it can provide 160,000 university graduates and 100,000 professionals and technical workers.
The city's per capita labor cost is about 30 percent lower than coastal cities.
A report on employee happiness by human resource company Kelly Services and online job site Zhaopin.com in April said that along with Beijing and Shanghai, Chengdu is one of the three Chinese cities that people are most unwilling to leave.
During the seminar, participants visited the rising hub for China's shared services centers - Chengdu Tianfu Software Park - where they visited operations by ANZ Bank, DHL, Damco and Huawei to find out why finance, communications and logistics giants have set up shared service centers in Chengdu.
Success stories
ANZ: ANZ Bank has a history of 175 years, has operations in more than 32 countries worldwide and provides banking and financial products and services to more than eight million customers.
Its Chengdu operations center was established in March and is the company's third following Bangalore and Manila. The center mainly provides call center services and background business operations to support the development of ANZ Bank in China and Asia.
DHL: Headquartered in Germany, DHL is the world's largest express delivery and logistics service. It provides services in 220 countries worldwide and has 300,000 employees.
In 2009, DHL set up its Chengdu shared services center to provide financial, accounting, human resource management and customer services. Today, DHL has 700 employees in Chengdu.
Damco: An international logistics company that integrates the world's largest container shipping company Maersk Logistics and Damco Logistics, Damco transports 2.5 million containers and 60,000 tons of air cargo each year.
Its service center was established in March 2010 to provide supply chain management for the group and external customers. It now has 1,100 employees in Chengdu.
Huawei: A leading telecommunications equipment maker, Huawei moved its national financial shared services center from Shenzhen to Chengdu in 2009.
The center now employs 400 professionals.