Japanese twist to a China play on outsourcing

Outrage over outsourcing is now shouted by politicians from as far afield as Tokyo and Tennessee, especially as information-technology specialists join displaced factory workers. Mention trading giant China in the same breath, and the decibels jump another notch.

Yet hard-nosed investors have long found that outsourcing has been a profitable theme to run with.

This debate will come into focus as the Hong Kong stock market prepares to welcome its first mainland software outsourcer.

More intriguingly, it is the company's prospects as a Japan-China play that are arousing market interest.

The name Sinocom Software Group might sound unambiguously Chinese, but it conceals some marked Japanese lineage. More than 90 per cent of its business comes from four Japanese corporates and strategic shareholders include NEC and NEC Soft - albeit with a less than 7 per cent stake.

Arguably, the company symbolises a renewed embrace of China and its economic growth by Japan - something to harness rather than fear. Increasingly, trade with its neighbouring giant is recognised as one of the drivers that has recently pushed Japan's economic growth rate to a 13-year high.

Japan's corporations have long moved much of their manufacturing overseas, especially across the waters to China.