China Government Boosts Service Outsourcing Upgrade

Monday, 10 February 2020 15:33

The Ministry of Commerce and seven other ministries and commissions issued the guidelines as Shang Fu Mao Fa [2020] No. 12 on 6th January 2020 (hereinafter is referred as the “Guidelines”) and China government will further boost the service outsourcing industry and step up digital transformation in key sectors such as cloud computing and software.

The aim for the development is that by 2025, China's offshore service outsourcing will be able to further strengthen its position as the main channel for service exports, and the proportion of digital services with high technology and high added value will continue to increase. The average annual output value of China's service outsourcing employees will be leading in the world by 2035.

The Guidelines have laid out the major tasks.

  1. Accelerate digital transformation

A major task is to bolster information technology outsourcing. IT-related research and development and applications, such as cloud computing, basic software, integrated circuit design, and blockchain can gain funding support from the national science and technology plans. We will foster a number of IT outsourcing and manufacturing integration development demonstration enterprises.

More efforts will be made to bolster new models. China will rely on 5G technology, to vigorously develop new models such as crowdsourcing, cloud outsourcing, and platform subcontracting.

  1. Promote the development in the key industry

Efforts will be made to enhance competitiveness in undertaking outsourcing services in pharmaceutical research and development, design, legal and accounting, and operation service outsourcing and to strengthen the capability of contracting and delivering such services.

Pharmaceutical research and development: except for those prohibited from entering China, the goods and articles imported by enterprises in the comprehensive bonded zone from abroad and used for biomedical research and development in the zone shall be exempted from the submission of licenses, and the imported consumable materials shall be verified upon the actual R&D consumption.

Design outsourcing: The government will support leading enterprises and scientific research institutions to open innovative design centers, improve their ability to design outsourcing, and support national industrial design centers and national industrial design and research institutes to outsource design services.

Legal and accounting outsourcing: the government will promote the outsourcing of services in accounting, legal and other fields. It is to promote the opening the market of accounting and legal through bilateral and regional FTA negotiations. The government is also to support accounting and law firms to provide post services for domestic enterprises to the overseas, and actively study policies to support overseas development and cooperation.

Business operation service outsourcing: Enterprises, especially state-owned enterprises, are encouraged to legally separate non core business and purchase operation services such as supply chain, call center, Internet marketing and promotion, financial backstage and procurement.

  1. Build up a global service network system
  2. Improve the training of talented people
  3. Cultivate and expand market subjects

The government will renew financial supporting manners. In accordance with the principle of fair market, the government will take full advantage of the service trade innovation and development guiding fund, and promote social capital to increase investment in service outsourcing industry.

The government is also to revise the “Directory of Guidance for Key Development Areas of Service Outsourcing Industry”.

  1. Promote the trade facilitation

The government will deepen the reform of "deregulation services" in the field of service outsourcing. Service outsourcing will be gradually included in the "single-window" in international trade.

In the service outsourcing demonstration cities, materials imported for service sectors such as research and development, design, testing and maintenance should be regulated as bonded goods on a trial basis.

If you want to read the complete article, you can refer to the below link (in Chinese only):

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Mr. Mike Chang

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