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IT Sourcing Options in China

June 22nd, 2005 · No Comments

David Scott Lewis writes:

China itself is divided into three economic regions: The Pearl River Delta (PRD), the Yangtze River Delta (YRD), and the Bohai Bay. In the IT sector, it is much better to think in terms of cities rather than regions, although the top three IT cities map one-to-one to a particular region: Beijing and the Bohai Bay, Shanghai and the YRD, Shenzhen/Hong Kong and the PRD. But this does not necessarily mean that the solution providers based in these cities are the best in addressing regional needs. For example: Hangzhou, part of the YRD, is strong in electronics manufacturing, but the three largest solution providers in Hangzhou do not have expertise in manufacturing automation. For the most part, the three economic regions of China do not map well with the IT sector.

I have found that the best approach is to loosely segment the IT sector into five tiers:

-The top tier cities of Beijing, Shanghai, and Shenzhen.
-The second tier cities of Dalian, Nanjing, Hangzhou, Guangzhou, Tianjin.
-The third tier cities of Chengdu, Xi’an, Wuhan, Changsha.
-The fourth tier cities of Qingdao, Zhuhai, Xiamen, Ningbo.
-The fifth tier cities of Jinan, Harbin, Shenyang.

Of course, Hong Kong shouldn’t be discounted and clearly fits in the first tier. And there are other cities worthy of consideration for niche applications, although primarily for contract R&D, such as Suzhou and Heifei for fault-tolerant process manufacturing applications.

Tags: Emerging Markets

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