Delivered by Zheng Xiongwei, Prestigious economist and Global Executive Chairman of APCEO

July 28th, 2012

Honorable Mr. Ablet Abdurishit, Vice-Chairman of NCCPPCC,

Honorable Mr. John Winston Howard,Former Prime Minister of Australia,Global Co-Chairman of APCEO,

Honorable Mr. Li Jiheng, Governor of Yunnan Province,

Honorable Mr. Michael Aaron Oquaye, Second Deputy Speaker of Parliament of Ghana,

Honorable Mr. Qiu Hong, Assistant Minister of Commerce, China,

Honorable Mr. Luo Zhengfu, Chairman of Yunnan Committee of CPPCC,

Honorable Mr. Wei Jianguo, Secretary-General of China Center for International Economic Exchanges, Former Vice Minister of Commerce of PRC,

Honorable Mr. Zhang Tianxin, Party Secretary of Kunming,

Honorable Mr. Zhang Zulin, Mayor of Kunming Municipal Government,

Distinguished leaders and guests,

Ladies and gentlemen, good morning!

First of all, on behalf of international host of this summit, I express my heartfelt welcome once more to all the respectable leaders and guests attending the 5th Global Outsourcing Summit. Again I extend my appreciation to the tremendous contribution our Chinese host of summit has made. And I want to say “thank you” for the support of ministry of commerce of the People’s Republic of China, ministry of foreign affairs of the People’s Republic of China and government of Yunnan Province.

It has been the 5th Global Outsourcing Summit. In the past five years, thousands of elites in global service outsourcing industry has made unremitting efforts with international dignitaries, Chinese government leaders, international officials and academic authority to promote corporation and development of global service outsourcing, strengthen regional economic cooperation and promote the restructuring of the world economy. They reach consensus and expand cooperation to achieve the goal.

In the special 5th year of Global Outsourcing Summit, we get together in the future center city of southern Chinese, also the center city of international service outsourcing, the beautiful and fantastic city of Kunming with “International service outsourcing: transforming development mode, promoting balanced growth and regional cooperation” as the theme of our summit. We work together to agglomerate consensus of the summit in the Statement of Kunming City on GOS. The statement as follows:

At first, the strategic effect of international service outsourcing on future global economic will be further strengthened, with the optimistic  market prospects and enormous potential of offshore service.

Global service outsourcing can link the nations and regions which are geographically distributed but information resources complemented together, while the service outsourcing has the irreplaceable strategic effects that cost savings, strengthen core competitiveness and create high performance. It also has the important meaning that deepens the international labor division and optimizes the industrial structure. For the host country, international service outsourcing is kind of important emerging industry which promotes scientific and technological innovation, protects ecological environment and promotes white-collar employment. At the same time, it’s the only way for the service industry in developing countries to be in line with international standards, and make the local service industry more international. While international service outsourcing is an important driving force for economic restructuring and development, and it’s an important impetus to realize the value of philosophy and improve management level.

Currently, the focus of the global service outsourcing is stable development. Global service outsourcing continues to grow in 2011 and its total market size reached 820 billion dollars. As Mckinsey&Company predicts, global service outsourcing market will be over 150,000 billion dollars. While the internationalization degree of service outsourcing strengthening, offshore service outsourcing reached 102,600 million dollars in 2011, as predicted to be 150 billion dollars in two year. As we know, execution of the current global offshore service outsourcing only consists less than 0.15% of the global GDP, and execution of Chinese offshore service outsourcing consists of less than 0.4% of its GDP in 2011 though it’s the world's second largest offshore outsourcing undertake country.

As it shows, the development space of global service outsourcing and offshore service outsourcing is tremendous.

Secondly, the global outsourcing is becoming more focused on high-end service and spreading in more regions.

The intrinsic motivation of outsourcing has been shifting from reducing costs to enhance the core competitiveness of enterprises, while the content, transactions and pattern of outsourcing has been changing and innovating, and the employers demand more on host enterprises. The service which is knowledge-based, high value-added, high technology, innovative and personalized will be more competitive. The high-end, diversified, vertical trend in global service outsourcing market is becoming very obvious.

In the next years, the geographical layout of the service outsourcing industry will be further extended, the focus of the diffusion effect of the service outsourcing industry will be re-layout and transfer to second and third level cities to ease the cost pressure of the service providers in HR, information, resources and trading. An important opportunity for the development of service outsourcing in many second and third level cities is coming.

Thirdly, the international service outsourcing will be facing the challenges at both macro and micro levels.

At the macro-level, as the repercussion of financial crisis, the sovereign debt crisis in western countries has not been solved, people call for the return of the real economy and industrialization policy, the requirement for global economic trade rebalancing is strong, the pace of global technological innovation is slow and the trade protectionism seems headed.

At the micro-level, the lack of supply caused by the shortage of high-end talent, the simple of service content, the trail of service technological advances, and the increase of transaction and opportunity costs caused by unsound service outsourcing related laws and regulations and nonstandard service outsourcing operation occasionally happened.

We should have a clear understanding that all of this will affect the size of the global outsourcing market and weaken the tendency of the development of service outsourcing industry.

Fourthly, it’s imperative to straighten out the relationship between the employer and host countries, and to transform the mechanism of international service outsourcing cooperation development.

The relationship between the employer and host is basic in international service outsourcing. The employer and host countries should work together to advocate the establishment of symbiotic, mutually beneficial, win-win, coordinated long-term and stable cooperation mechanism, and work together to open up new opportunities and situation for the development of international service outsourcing. In the future world economy, developed countries should make full use of the advantages in core technology and innovation to extend the high-end areas of the value and industrial chain. And developing and emerging countries should positively change strategy according to the countries’ or the regions’ factor endowments and comparative advantage, and make the service outsourcing industry more technological, specialized and aimed. The host countries should accelerate the training and learning of enterprises and employees continually, as update the advanced technology, service experience and business knowledge to realize innovative development.

Fifthly, Service outsourcing will take Chinese economy to a new glory.

In recent years, international service outsourcing in China has been growing fast, thriving as rapidly as manufacturing internationalized in those years. International service outsourcing is becoming an important means to promote conversion of growth, achieve balanced with development global economy, and promote regional cooperation for China. At the same time, international service outsourcing drives and accelerates the development of domestic service outsourcing. The rapid growth in domestic demand of services has become an important and effective part of the Chinese government to expand domestic demand. Service outsourcing will take Chinese economy to a new glory. As predicted, the employers in Chinese service outsourcing enterprises will reach 20 million in the next 5-8 years, and China will be the biggest offshore outsourcing undertakes country in the world. As we can expect, after 10 years or 20 years, China will become one of the countries which own the largest service industry in the world.

In the process of developing service outsourcing, China should focus on solving the problem that private service outsourcing enterprises are generally weak and service outsourcing industry entrepreneurs are in short supply. And China should also supply more policy and economic support to accelerate the pace of industry promotion, strengthen scientific industry planning, speed up the cultivation of talents in the service outsourcing industry and improve the system of laws and regulations in the service outsourcing industry, in order to comprehensively promote the healthy and sustainable development of Chinese service outsourcing industry.

Ladies and Gentlemen, service outsourcing is the inevitable requirement of optimal allocation in global resources and the important content of global economic trade corporation. Today, we should take it as an honor as our effort and think is vital to the development of the global outsourcing industry and has a far-reaching impact on the development of the world economy. 

Thank you!