Dalian Software Park (simplified Chinese: 大连软件园; traditional Chinese: 大連軟件園; pinyin: Dàlián ruǎnjiàn yuán) is an industrial zone, created in 1998 in the western suburbs of Dalian City, Liaoning Province, China, where many of the world's large and medium-sized IT-related companies have set up shop to do software development and information services. While American and European companies typically have gone to Bangalore and other cities in India because of the English language capability, the Japanese companies have gone to Dalian and other cities in China due to the Japanese language capability.
Dalian Software Park Co., Ltd（DLSP）was invested and established by Yida Group, is a professional service provider in business park development, management and operation. By the end of 2009, there're over 500 enterprises in the Dalian Software Park, 41% of which are foreign-funded. There are 37 Fortune 500 companies including IBM, HP, Accenture, Panasonic, Sony, Hitachi, NTT, Oracle, AVAYA, NEC, Fidelity, BT etc. In 2009, Dalian Software Park realized an annual sales income of RMB 20.2 billion, with an export value of USD 0.86 billion.
Dalian is one of China's 11 "National Software Industry Bases" and one of five "National Software Export Bases." Currently, more than 300 companies, including 32 Global 500 corporations, have offices in the park.
Nearest airport, Dalian Zhoushuizi International Airport, is 10-20 km away from Dalian Software Park. Its nearest national highway is G202. [1]
Beginning in the 1980s, many IT companies in the developed world began to take interest in offshore labour markets. IT related work in the developed countries had been suffering from lack of IT workers and increased cost. The worldwide trend is now moving from domestic outsourcing to overseas outsourcing into countries that have a comparative advantage in labour intensive business activities. The IT work is not only software development which require engineering skills (ITO), but also other business work which requires soft skills rather than engineering skills. (BPO), such as call center and other information services is a major aspect of DLSP's tenant's offshore business.
Having been the major industrial base of Manchukuo during Japanese colonization, Dalian has a history of foreign investment. Since the early 1980s, Dalian has been a major recipient of Japanese and Korean foreign investment. Software development in Dalian began in the early 1980s. To attract economic activity, the municipal government established the Dalian Development Zone in the northern suburbs and the Dalian High-Tech Zone in the western suburbs for the high-tech industries. During the first half of the 1990s, application software outsourcing from overseas, particularly from Japan, has increased. Dalian Hi-Thik Computer Technology Corp. (DHC), which had derived from Dalian City Computer Center, and Dalian Hisoft Corp. were established in High-Tech Zone. They were involved in application software development, outsourced from NTT Data, NEC, Hitachi Software Engineering, etc.
Since the 1990s Dalian City has emphasized the development of the IT industry, especially in Dalian Hi-Tech Zone and Dalian Software Park in the western suburbs near Dalian University of Technology. There, there are not only Chinese IT companies, such as DHC, hiSoft and Neusoft Group, but also American, European, Indian and Japanese IT companies, such as Accenture, Dell, Genpact, HP, IBM, Liferay, SAP AG, Oracle Corporation, Siemens, Alpine, CSK Holding, Panasonic, NEC, Sony, Cisco, Netapp, British Telecom, Aspect, and Fidelity. Currently, the "Lushun South Road Software Industry Belt" Plan is proceeding, including Dalian Software Park Phase 2..
Dalian has recently become an important center for information technology offshoring and business process outsourcing, similar to Bangalore in India; the city was described in "The World Is Flat" by Thomas Friedman (2007). In another way, Dalian is the forerunner of China's "Re-Development of the Old Industry Bases in Northeast" National Project, which began in 2002.
Today, Dalian is the most establishes information technology outsourcing (ITO) and business processing outsourcing (BPO) city in the PRC and among the top ITO and BPO destinations in the world.
Dalian High-Tech Zone was established in the late 1980s in the western suburbs near Dalian University of Technology and Dongbei University of Finance and Economics. It is a mixed industry zone where pharmaceutical manufacturing and other plants have back office operations. Dalian's pioneering IT companies, such as DHC and hiSoft are headquartered here.
Dalian Software Park (DLSP) was established in 1998, in the 3 km² area, in the western suburb of Dalian, near Dalian High-Tech Zone. It is surrounded by the hills on the three sides and by the Yellow Sea on the remaining side, and is an academic area where Dalian University of Technology and Dongbei University of Finance and Economics are located.
Management of the Park is done by Dalian Software Park Co., Ltd., a private enterprise 100 percent owned by one of the three largest real estate developers in Dalian (Yida Group), which is rare in China where all other software parks are managed either directly by local governments or indirectly by government agencies. The company provides professional services, from registration and basic property management to human resource services to assist in the operations of the IT companies. See also "Preferential policies" below.
Today, Dalian Software Park is the leading business park management and development company in the PRC. In addition to the park in Dalian, DLSP has developed parks in Wuhan, Suzhou, and Tianjin.
Established in 1999, Dalian Software Park is a key part of the development of Dalian, a hub of the international IT industry in China. With an area covering 7.16 square kilometers, Dalian Software Park is one of the ten State-level software industry bases. Its export volume is increasing by 100 percent annually. Over 300 enterprises, including more than 60 foreign companies, have settled their IT business in the park.
As it opened officially, Neusoft Group came to this park to establish their development centers, and later established Neusoft Institute of Information. Matsushita Electric Industrial (Panasonic) was the first to enter the park, followed by Alpine, Sony and others.
American and European companies, such as GE (Genpact), HP, IBM and SAP, came to establish ITO and/or BPO centers, mainly to do their Japanese subsidiaries' work. Chinasoft (headquartered in Beijing) and Xinhua were among the first Chinese-owned IT companies. Later, such Chinese-owned IT companies as iSoftStone (Beijing), New Touch (Shanghai) and Nantian (Shenzhen) also came. See also "Dalian Software Park Phase 2" below.
Currently, there are more than 380 companies in Dalian Software Park (a September, 2006 survey by Dalian Software Park):
The IT service work done in Dalian Software Park can be categorized as follows (A 2006 survey by Dalian Software Park):
Application development is done mostly by the engineering school graduates of the universities, while embedded software development requires more technical skills in the areas, such as telecommunications or special hardware.
Those workers involved in BPO varies from the middle school graduates for data entry, to the foreign language school graduates for simpler BPO work, and the returnees of overseas studies for inbound or outbound call center/contact center work. To emphasize the importance of information privacy, Dalian City Software Industry Association has recently implemented, in cooperation with Japan Information Processing Development Corporation (JIPDEC), a city-wide PIPA (Privacy Information Protection Assessment) program.
Dalian City is located in the southern tip of China's northeast region. It is surrounded on the three sides by the Yellow and Bohai Seas, and is known for a relatively mild climate in this region with otherwise severe winter.
Dalian has a metropolitan population of about 6 million. It is the most developed city in the northeast region.
Most of the IT workers come from the engineering schools of the universities in Dalian and other cities in Northeast China. In Dalian, there are Dalian University of Technology, Dalian Jiaotong University, Dalian Maritime University, and Neusoft Institute of Information which is within the Park. In other cities, there are Northeast University in Shenyang, Jilin University in Changchun, and Harbin Industrial University in Harbin.
Workers with English ability come from the various universities where English is predominantly their first foreign language, but they lack the experience of the Indian university graduates with working knowledge of English. There are also the English-speaking returnees of study abroad, typically from U.S., Canada, Australia, New Zealand and Great Britain. French speaking workers are from Dalian University of Foreign Languages (DLUFL, 100 graduates each year), Liaoning Normal University (LNNU, 30 graduates each year) or the returnees of study abroad, typically in France and Quebec, Canada. L'Alliance française, France's worldwide network of French language education, is located at DLUFL.
Dalian is particularly unique in the fact that there are many workers with Japanese language ability for the following historical reasons:
Another factor contributing to the Japanese language capability in Dalian is the presence of about two million ethnic Koreans, most of whom live in the Northeast. Culturally and linguistically, China's ethnic Koreans are nearly identical to the people in South Korea. Subsequently, they are capable of learning and speaking Japanese with ease.
The Dalian municipal government offers generous tax exemptions and subsidies such as corporate income tax exemption during the first two years of business establishment and 50 percent tax reduction in the following three years. After this five year period, the Dalian municipal government will offer a reduced tax rate of 15% rather than the usual 25% for high-tech companies.
The preferential policy of Dalian City can be summarized in the following points:
The construction of Dalian Software Park Phase 2 was begun in 2003 as part of the City Government's "Dalian Software Industry Belt Along Lushun South Road" Project, in a 12 km² area, immediately west of Dalian High-Tech Zone.
It was announced in June 2007, that a Dalian International Service Outsourcing Base will be created at Dadonggou, on Lüshun North Road, about ten kilometers west of Dalian International Airport.
Based on its experience of success so far, Dalian Software Park has decided to build other software parks, in cooperation with the local hi-tech committees:
DLSP is also aggressively seeking to expand into other regions in China.
There are 30-50 City-level, Province-level and National-level software parks in China. There are eleven National level software parks, in: Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Shanghai, Xi'an, and others.
A brief look at these cities are:
The following references are written in Japanese: