China´s government China is attempting to develop an IT services industry through tax cuts, financial support and reducing bureaucracy
Reuters published that the State Council – China’s chief administrative authority – will reduce corporate tax to 15% in certain cities and even trial a tax-free policy for international outsourcing services. It will also cut red tape, said the report. The government wants to move away from a heavy reliance on low-cost manufacturing and develop IT services and other value-add services.
Among the advantages China offers a low-cost labour and a large supply of skilled IT professionals, with 350,000 computer science graduates every year and the fact that multinational companies want to get into the nation to benefit from its growth (GDP growth tax close to 7,2% a year, for instance).
The recent 2014 Global Services Location Index, from AT Kearney, outlines the most advantageous places to outsource services to, which is relevant when making decisions on where to set up global delivery units. It looks at factors such as the cost of service and the availability of skills. Asian countries dominate the management consultancy’s index of the top 50 global locations, with India (1), China (2) and Malaysia (3) making up the top three. Eastern and Central Europe also feature in the index, with Bulgaria (9), Poland (11) and Romania (18). Latin America has two of the top 10 outsourcing locations with Mexico (4) and Brazil at 8th place.
But China is not without its fears for businesses; intellectual property law and the lack of human rights to name two.