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Start-ups

Dalian highlights lifestyle, low living costs in drive to become back office hub for techs, multinationals

The northeastern Chinese city says it wants to become an international back office hub for big tech, start-ups and multinationals

PUBLISHED : Sunday, 16 July, 2017, 4:57pm
UPDATED : Sunday, 16 July, 2017, 10:59pm

International technology firms are increasingly interested in setting up back offices in Dalian, drawn by its human resources, low operating costs and local government incentives, according to accounting firm Deloitte.

Andrew Zhang Qing, managing partner of Deloitte Dalian office, said many international firms such as Pfizer, HP, Genpact and Accenture, among others, have set up business process outsourcing units in Dalian in recent years.

“In the digital era, it would be more flexible for international companies to outsource some of their back office operations to other countries in a bid to cut down operation cost and enhance efficiency. Deloitte in Dalian has helped advise many international firms to set up their business process outsourcing units in Dalian,” he said during an interview in his office in the centre of Dalian.

Among the attractions, Dalian has a lower cost of living than other major centres in China.

“The living cost in Dalian, which is a tier two city, is much lower than Shanghai or Beijing but the living quality is among the best in the mainland. The city has good air quality and mild weather ,” he said.

Zhang said government support and an educated workforce are also important in attracting multinationals to the city.

“There are many high quality universities in Dalian, so we have graduates who can speak fluent English, Japanese and Korean. The historical linkages with Japan and Russia have meant older generations can also speak these foreign languages, which shows the wide talent pool for international technology companies,” he said.

Government policies also count. The State Council in April 2016 approved the set up of Shenyang-Dalian Independent Innovation Demonstration Zone to develop new technology in the city.

“It is the government policy that it wants to promote more international firms to set up their business processing outsourcing units,” he said.

Nick Yu Fengqi, founder of Dalian ZCX Management Consulting company, a Dalian-based technology consulting firm, agreed the city is an ideal place for start-ups and other technology companies.

“The Dalian government has offered free rent for certain periods of time for new start-ups, which has helped encouraged youngsters to set up innovative business in the city,” Yu said.

Zhang, originally from Shanghai, joined Deloitte’s Dalian office 20 years ago when there were only about 20 staff. The office has since expanded to over 200.

When he first joined, the office was mainly advising clients from Japan and Hong Kong on opening manufacturing or retail offices in the city, which is among the first batch of special economic zones that opened to international investors from 1992.

“Twenty years ago, we were mainly doing advisory and auditing works for the international firms investing in Dalian. Nowadays, weadvise mainland firms to expand outside the mainland, as well as technology firms looking to enter into Dalian,” he said.

Looking ahead, Zhang believes the Belt and Road Initiative is going to add more opportunities for both local and international firms in Dalian.

“Dalian has shipbuilding and other heavy industry while it is a major port in the northeast of China. The Belt and Road is going to bring more international firms to invest in the city,” he said.

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