Indian firms looking at western parts of China for investment

Indian firms looking at western parts of China for investment

"The financial crisis has pushed companies to the western parts of China to further reduce costs", Tingting Du, Vice President, Chengdu Hi-tech Investment Group and President Chengdu Tianfu Software Park, who is in the city to promote investment in China, said.

She said a growing number of back-office operations were moving from coastal areas like Shanghai, Beijing and Shenzhen to cities like Chengdu to enjoy cost savings.

Indian companies like Wipro and NIIT have chosen to locate their operations in Chengdu, a hub for outsourcing, transportation, and communications industries.
Logistics giants DHL and Maersk have moved backoffices this year from south of China and Shanghai to Chengdu. They plan to ramp up over 1000 headcount in less than 18 months in Chengdu, which had software exports of more than USD 300 mn in 2008.

Du said the competition between Tier II Chinese cities to attract investments is hotting up with Chengdu joining the race along with Tier II cities like Wuhan, Chong Qing and Xian trying to attract Indian and global players by offering cost arbitrage in rentals and manpower,apart from other incentives.

In terms of rentals, cities like Chengdu were 50 per cent less than in Tier I cities and labour cost 30 to 50 per cent lesser, she added.