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Tianjin Binhai Software Park: A Brand New National Outsourcing Base

Tianjin Binhai Software Park is a 3.5 sq. km, newly-launched national outsourcing base in the Binhai development zone. Built to eco-friendly standards and located in a coastal environment, the park features numerous modern amenities, including a polo playground in the park’s sports facility.

This outsourcing base is brand new; its official grand opening just occurred on June 22, 2009. However, it looks surely set to benefit not only from its state-of-the-arts modern infrastructure but also from the growing need for domestic IT services, a recent trend fueled by powerful government investment in and ongoing transformation of China’s industry and its economy.

Tianjin, a strategic eastern coastal city, has always been a major industrial city in China. Prior to 2007, Tianjin was well-known to the outside world as a major manufacturing hub for China’s electronic, metallurgy, oil, and marine chemical industries. In 1992, Motorola established its largest global cell phone manufacturing plant in Tianjin, since which time the plant has been the chief profit source for the company.

A significant development for the city came in 2006 when the State Council of the Central Government announced “new advancements for the Tianjin Binhai Development Zone” would be effected. This new development strategy included plans to build and/or expand the green food, bio-pharmaceutical, and new materials and new energy industries, as well as to become the dominant leaders in the aerospace, financial services, modern logistics, and service outsourcing sectors.

Since then, over 360 projects have been under construction in Tianjin, including mega-projects by companies such as Airbus (which has installed an aircraft assembly plant for its best-selling A320 series, and delivered its first China-assembled A320 jet on June 23, 2009), Vestas Wind Power, and PetroChina Bohai Sea, which directs oil drilling projects. The total projected investment for the area is an eye-popping 700 billion RMB (about 100 billion USD) in the next few years.

The fact that the Tianjin outsourcing base is part of such a gigantic development zone means that it will have easy access to thousands of IT projects in the coming years.

It is in this sense, Tianjin Binhai Software Park is a kind of brand new outsourcing hub where both buyers and providers of outsourcing can both find their niches.

PROFILE: Around 250 software enterprises are already settled in the Park, including 98 that specialize in software exports and outsourcing. Among these, thirteen enterprises have CMM certifications and 50 have ISO 9000 certifications.

As Tianjin has become more of a global manufacturing hub, the demand for software development and IT service outsourcing has increased dramatically. Global manufacturing giants Motorola, Sanyo, Honeywell, National, and Samsung all have their R&D centers in the area, as do many Chinese manufacturing heavyweights. The total revenue from software products exceeded 2 billion USD; over 50% of revenue derived from software for embedded systems.

With projects worth $100 billion currently being developed, the base is expecting a strong demand in the embedded areas, and also aims to expand into financial, pharmaceutical, and design areas as more outsourcing opportunities become available.

INTERNET/TELECOMMUNICATION INFRASTRUCTURE: The city has well-developed communication infrastructure, including an optical backbone and designated trunks for international gateway (>10G bandwidth). There are over 4 million fixed- line users, 8 million mobile users, and 3 million internet users in a city of 11.2 million inhabitants.

TOP UNIVERSITIES and TALENT POOL: There are 45 colleges and universities in the area, among them the renowned Nankai University and Tianjin University. Additionally, there are 18 colleges that offer 230 majors in software and information technology. The city also has 389 training centers and 2-year colleges.
In the city and its immediate vicinity, 600,000 engineers and researchers are currently employed in 159 research institutes, 8 national labs, 10 state engineering R&D centers, and 27 national & ministerial testing centers.

TRANSPORTATION: With connections to 22 countries and 66 cities worldwide, Tianjin Binhai airport is the hub of China Northern Airline. Tianjin is also a hub for railroad travels, with 3 major railroad lines crossing the city. It takes about 2 hours via train or highway to reach China’s capital city, Beijing.

As one of the most important coastal cities in China, Tianjin’s port is capable of handling 300 million tons of goods per year. It connects to more than 400 international ports in 180 countries around the world.

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GOVERNMENT INCENTIVES AND GOALS: As a newly launched outsourcing base, Tianjin Binhai Software Park aims to encourage innovation and brand-building. The base has issued over fifteen policies & directives on favorable tax codes, subsidies for training & real estate, streamlined business processes, attracting high-end talent, and rewards for performance & innovation.

The city government’s short-term goals (within the next five years) include:

(1) reaching revenue of $ 4.3 billion; service outsourcing revenue exceeding $1.5 billion
(2) >70 enterprises passing CMM/CMMI3, and at least 30 enterprises passing CMM/CMMI5
(3) Growing 1-2 large outsourcing firms with more than 10,000 employees
(4) Training 120,000 outsourcing professionals