Blog about Virtual Assistant, Outsourcing, KPO, BPO and China

Bertelsmann AG, the German media group, announced that it will close its 36 chain bookstores in 18 cities of China by the end of this month. As one of most successful bookseller in the world, Bertelsmann shares an excellent fame. With the help of the fast postal delivery and convenient online-paid system, initially, the status of Bertelsmann could not be replaced by other competitors. However, 13 years after Bertelsmann starting its business in China, it has to adjust its sale strategy, because of the pressure from the local competitors and the rising of the cost of the bookstore rental. Though Bertelsmann runs successfully in Europe and other places of the world, however, we should not suppose that it would win in Chinese market. For example, the reading habits of Europeans may be better than that in China, they always buy books through the Bertelsmann system. Moreover, according to the report from agencies that the price of book in China is 1/4 as high as that in Europe, ironically, the rental of the bookstore is nearly the same as that in developed countries. Thus, attributed to the high cost and low consumer records, Bertelsmann may be difficult to perform well as it is in other regions.

Furthermore, by imitating the postal delivery network and online purchase system, dozens of local booksellers receive the fairly high reward, comparing with Bertelsmann. Www.dangdang.com, www.amazon.cn and www.99read.com are main local competitors for Bertelsmann. The similarities of the competitors above are they don’t have entity bookstores, which will largely reduce their cost. In addition, their online service and delivery service are more available and friendly than what Bertelsmann supply. Last but not least, they adapt to the habits of Chinese readers. Selling the books in more various fields and themes, the local online booksellers are chosen by most of Chinese readers. What they need is not the most famous booksellers, but the most cheap and suitable books. In order to meet the demand of the mass, the local online booksellers give more discounts.

In my opinion, the failure of Bertelsmann warns the enterprises which plan to invest in China. Firstly, they should adapt to the characteristics of the social status qua, political environment and consuming habits of people. While purchasing the high profits, they should find suitable partners to conquer the barriers. Outsourcing industry really helps to handle the dilemmas. Without the rental of the offices and factories, the foreign investors will save a plenty of cost. Moreover, the companies which are engaged in ITO and BPO may play a significant role in the near future in the region of foreign trade. BPOVIA is a typical outsourcing enterprise, which provides universal service. The service will assist the foreign capitals to avoid the unaccommodated of Chinese market and society, which would eventually promote your business in China.

Popularity: 5%

China Business, China Business News foreign capitals, retreat of Bertelsmann

US Secretary of State Condoleezza Rice visited China late June. Her visit definitely represented the friendship and strategic cooperation relationship between China and U.S. During her two-day visit, Rice not only met the minister of foreign minister, but also went to the Sichuan earthquake disaster areas to console the victims and donate some infrastructures to help the rebuilding of earthquake-hit regions. As the first foreign leader who visited the Sichuan Province, she really shared a high reputation by Chinese mass media and public. Moreover, Bush president has declared that he will attend the opening ceremony of Beijing Olympics, although there’re some dissenters boycotting the events for the reason of the misreading of Chinese human rights records. From the attitudes of the leaders of U.S, we may obviously conclude that the Sino-U.S relationship is on a relatively steady condition.

Besides, the significant improvement in the realms of the international trade between the largest developed country and biggest developing country should be highlighted. According to the recent statistics from China’s Ministry of Commerce, China is the second-biggest trade partner of the US and its fastest-growing export market. In addition, show trade volume between the two nations hit a record high $302.08 billion in 2007, 15 percent more than the previous year. With direct investment in China exceeding $56 billion, funding a total of 54,595 projects by the end of last November, the US continues to be China’s biggest source of foreign investment.

However, as China’s entering for the WTO in Nov. 2001, Chinese enterprises began to expand their business in other country, especially in North American and European Union. Since the reform and opening up policy implemented in China, the FDI (Foreign Direct Investment) has become the major source of foreign investment. Notwithstanding, we should not ignore the potentiality and competitiveness of Chinese companies. Haier and Levono have establish their branches in several continents, in order to enlarge the scale of the sales. Similarly, as the pioneer of the outsourcing industry, BPOVIA is not content with the business only in China, expanding their business to the other parts of world has become their new destination. The news comes that BPOVIA will set up its branch in Chicago, U.S, which will absolutely help the company to improve the relationship with the customs. Moreover, the communication between the company and customs will be more direct and convenient. Obviously, both the company and customs will benefit a lot from the business expanding strategy.

Hence, as the development of China’s economy, it’s a trend for the Chinese enterprisers to invest in other countries. BPOVIA, accompanied with other prominent brands, will surly help Chinese enterprises to establish their great images in the world.

Popularity: 7%

BPO, China Trade Import Export FDI, Sino-U.S relationship

The Financial Times reported on July 8th that China’s booming economy in the past two decades has produced a prosperous private wealth and a new class of super-rich. This point is evident in the changes appeared in Hurun Report’s rich list, the minimum requirement rose from $6 million nine years ago to $100 million last year. Besides, the number of dollar billionaires has increased dramatically, from 7 in 2004 to 105 in 2007. And Rupert Hoogewerf, editor of the Hurun Report, said that the country’s parvenu have gone through the initial stage of securing their family’s financial independence and have established relationships with the government and paid their taxes.
On another report, a 2008 world wealth report by Merrill Lynch and Capgemini, 415,000 people who have $1 million in disposable assets are listed, which makes China home to more millionaires than any other country in the world. In a list compiled by Forbes 66 Chinese billionaires are shown. Below the super-rich level is the rapidly expanding class of millionaires.
The growth of private fortune is attributable to three factors, according to The Financial Times: First, “a surge in entrepreneurship in the past two decades has produced a generation of successful private companies”. Lots of these business people and their companies have achieved success and become industry leaders. Second, “the boom in the mainland stock market”. Share prices multiplied in last two years, and a number of entrepreneurs took the golden chance to list their companies and seen their net worth increase dramatically. Third, “the hot property market in many larger cities, which has expanded the net wealth of the country’s rich, many of whom have a significant share of their investments in the real estate sector”.
Another change happens upon the Chinese rich is that more and more them become members of CPC. “At this year’s annual meetings of the National People’s Congress, the legislature, and the China People’s Political Consultative Conference, an advisory body, there were about 80 delegates from the 2007 rich list,” the newspaper reported.
But the average annual incomes in China’s countryside are less than 4,000 yuan, which means a growing wealth gap. Based on this the Chinese government has substantially increased social spending in rural areas, the newspaper reported.

Popularity: 4%

China Business a new class, china's parvenu, Hurun Report, super-rich

While world leaders gathered in Japan to find solutions to rising energy and food prices, a Chinese official reiterated that China’s support to biofuel development has not caused the global food price surge. Zeng Xiao’an, a deputy department director of the Ministry of Finance said China’s scale of fuel produced form corn is very small and China has already stopped all new projects.
China’s corn-based ethanol production capacity is only 1.3 million tons. But in the US, it’s 19.8 million tons. The US plans to produce 110 million tons of biofuel by 2020. It’s the United States that should take the blame for its massive production of fuels from corn and other grains that has pushed up their global prices. Facing the soaring food prices, especially since last August, the World Bank has said developed countries should reduce the amount of grain being used for fuel and increasing grain aid to regions worst hit by the food crisis.
Having a large population to support, China will not develop biofuel at the cost of grain security, said Zeng, but the central government will offer financial support for biofuel from agricultural waste, such as wheat straw, corn stalks, animal feces and non-grain farm produce, which China produces quite amount every year.
China has always encourage farmers to use green energies like biogas, methane which are both energy saving and environmentally friendly. And China is striving to build a environmentally friendly society.

Popularity: 5%

China Economy America, biofuel, China, energy shortage, rising food price

CNN reported that Air New Zealand has frozen the salaries of senior executives, cut out bonus payments and is reviewing “nonessential” activities to cut stuff numbers, as it battles soaring fuel costs and sliding passenger demand for seats. Chief executive Rob Fyfe said in a statement Tuesday pay increase for managers will be achieved only through staff reduction or increase productivity. And senior management will be the first to feel the squeeze with their salaries feozen for a year. Other managers will earn less through the loss of short-term incentive bonuses.

Air New Zealand has 20top executive in New Zealand who earn more than 250,000 New Zealand dollar (US$189,000) a year.

Days ago German industrial conglomerate Siemens says it is cutting 16,750 jobs worldwide.

Popularity: 4%

China Outsourcing Air New Zealand, soaring fuel costs, stuff reduction

The People’s Bank of China issues the 10-yuan Olympics commemorative bank note today. Astonishingly, there’re thousands of people waiting outside the local banks in many main cities since last night, in order to obtain the golden-like note. The price of the note has risen to 3000 RMB. However, it is would be difficult to imagine that China even had no qualification to participant the Olympics 30 years ago. As the process of the China’s reform and opening up, it makes the people witness the marvelous change of an excellent nation worldwide.

According to the recent report from Yahoo.com, it illustrates some evidences that China will take place of the United States as the biggest super power by the year of 2035. Different from the development of many NIC (newly-industrialized countries) and developing counties, the China’s economy is not merely driven by the export industries, such as textile, toy and clothing, but also by the vigorously domestic demands and other forms of economies. For instance, as the time goes by, a brand-new style of business system emerges, which is called outsourcing, consisted of ITO and BPO, may lead China’s economy in the future. BPOVIA, headquartered in Nanjing, is one of the successful companies which contributes a lot to the establishment and development of the outsourcing industry.

Furthermore, the report mentions a definition of PPP (purchasing power parity), which means the similar function as Big Mac Index. Agencies used to evaluate the purchasing power of currencies, based on the prices of the Big Mac in the McDonald’s chains all over world. The recent research showed that RMB is under-evaluated by more than 50%. Thus, as a matter of fact, the cost of living and goods is higher than it shows. Moreover, owing to the revaluation of RMB and the relatively-high CPI, dozens of export-oriented enterprises are put into deadlocks. Without the advantages of the cheap labor force and exchange rate, Chinese entrepreneurs should find a suitable solution to cope with the adversary. Fortunately, outsourcing industry successfully solve the problem. Based on the hi-tech and skilled staff, ITO and BPO firms could control their costs and provide more high qualities services worldwide. As the industry leading position, BPOVIA is engaged to optimize its service and promote the relation between customs and service providers, which seriously helps the enterprises avoid the routine of price competition, but focuses on the technology and talents.

Pursuing the opportunities of the time transition is fairly essential for the development of economies, such as the Netherlands, UK, Germany, Japan and U.S. Nowadays, China is just promoting its economy as what other super powers used to. The outsourcing industry will surly help Chinese economy to continue its prosperity, control the high CPI and eventually shift China to the summit of world stage.

Although we should not omit the problems on the political democracy, poverty, corruption, social equalities, and other social problems, we optimistically estimate China would eventually overtake the U.S in the near future.

Popularity: 7%

BPO, China Economy China's economy, outsourcing industry

Because of the slowing economy, industrial conglomerate Siemens says it is cutting 16,750 jobs worldwide, with 12,600 mostly administrative jobs, along with another 4,150 positions in a restructuring in some of its units. The cuts amount to 4.2 percent of its 400,000 stuffs.
Chief executive Peter Loescher in a statement said that the speed at which business is changing worldwide had increased considerably, and they are orienting Siemens accordingly, and against the backdrop of a slowing economy, they have to become more efficient. Siemens said the cuts were being made in an effort to reduce total costs by $1.8 billion by 2010.
Siemens announced that it will consolidate its businesses from the current 1,800 separate legal entities to fewer than 1,000 and take its 70 regional companies and transform them into 20 regional clusters. It would also reduce costs further by cutting back expenditures for information technology infrastructure and consultants, and the recent streamlining of its management structure and divisions. For example, the management board has been reduced from 11 members to eight and the company’s previous eight divisions have been reduced to just three divisions: energy, industry, and health care. It is said that 5,260 workers among its 136,000 workers in Germany will be cut.
Its chief financial officer Siegfried Russwurm said they want to begin negotiations with the employee representatives quickly in order to make the cuts in a way that would be as socially responsible as possible, and only as a last resort would they terminate employment contracts for operation reasons. Siemens said it was considering offering employees transfers to other companies and early retirement packages in a bid to avoid forced layoffs and dismissals.
Before this announcement, Siemens has faced a corruption and bribery scandal that emerged in 2006. The company has acknowledged dubious payments, totaling up to $2.04 billion, which were used by the company to secure business as Siemens announced.
Siemens is not alone in announcing major job cuts. A big American airline company is planning to cut 7,000 workers starting Aug. 1.

Popularity: 5%

China Outsourcing a slowing economy, efficient, job cutting, reconstruction, Siemens

According to a research thrown by Alibaba, 65 percent of its members have potential customers in China, while 22 percent of its members have sold their products in China. The need for some consumer goods, such as foods, high-end textiles and garments importing are increasing rapidly.
Some in the industry see a large market for import as Chinese people’s life taste become more and more internationalized. An increasing number of Chinese companies are purchasing hi-tech equipment and materials as they are trying to move the value chain. So there is a potential market in this sector. Meanwhile, many small and medium-sized foreign brands eager to get into the vast market in China, are expecting to enter China through local traders. One example is a small business which is registered on Alibaba. The company’s employees fly to South Korea to get the latest style design and later sell it to the customers in Shanghai.
Based on the trend, many China exporters shift to imports. A typical example is the experience of Liu Xuefei, a trader in Guangzhou, a southern China city. He halted his jobs of selling Chinese ceramics to Australians and Americans and shift to import wine in 2005. Liu changed his business for two reasons. Firstly, the number of rich people around him is increasing; Secondly the United States was urging Chinese yuan appreciation. And he said he majored in economics, and (based on his knowledge), he felt imports in China would be a promising business.
And his 3-year experience has proved his surmise is right. He now sells wine to Chinese who have started to appreciate the drink, which have been considered a part of Western upper-class lifestyle. For thousands of years, baijiu or white spirits has been the dominant drinking. Now China has become the fastest growing market for wine in the world. Liu’s small company sells nearly 60,000 high-end bottles to Chinese companies, including high-end restaurants, airlines and five-star hotels.
Liu is not alone, an increasing number of small and medium-sized Chinese companies have shifted to imports as China’s exporters grapple with rising costs. This phenomenon can be proved by the information proved on Alibaba’s online platform.

Popularity: 6%

China Economy China, export, import, increase, shift

On July 7th China Oilfield Services Ltd (COSL) decided to offer 85 kroner a share in cash to buy Norwegian company Awilco Offshore ASA (AWO). The offered price is 18.7 percent over the closing price of AWO shares on July 4.
COSL owns and operates the largest and most diverse offshore fleet in China, including 75 support vessels and four oil tankers, five chemical tankers, 8 seismic vessels and 4 geotech survey vessels. Besides, it operates 15 drilling rigs, including 11 jack-ups and 3 semi-submersibles while operating 1 leased jack-up rig. AWO is an international offshore drilling contractor owning and operating 5 jack-up drilling rigs and 2 accommodation units, another 3 jack-up drilling rigs and 3 semi-submersible drilling rigs under construction, and an option of constructing 2 semi-submersible drilling rigs. The combination of COSL and AWO would create the world’s eighth largest rig fleet, consisting of 34 operated rigs (including rigs under construction) with operation and growth opportunities in most major international markets.
CFO of COSL said that the company is seeking assets in Southeast Asia, the Middle East, Africa, North America and Russia. And the company statement said that AWO’s modern high-specification rigs and cutting-edge technology for offshore drilling was a good strategic fit for COSL pursuant to its globalization and growth strategies. The company’s profit were up 98 percent to 2.24 billion yuan in 2007 on rising business revenue, with four of its main businesses, including drilling, marine and transportation, oilfield technology and geophysical survey hit record high.
China, the world’s second largest energy user, has stepped up its search for oil and gas at home and abroad to sustain its fast growth.

Popularity: 6%

China Business News AWO, COSL, drilling, energy, rig fleet

China is celebrating her one-month countdown to Beijing Olympics, with the predominant accomplishment of Chinese women’s tennis in Wimbledon, we have the sufficient reasons to make the world convince that China athlete team will surly perform splendidly in this summer. Not only what we would achieve in the sport-related events, but also in the realms of economy, such as outsourcing service.

According to the recent news from Xinhua net, attributed to China’s market potential, rich labor resource, and continuous improvement in infrastructure, China is experiencing the rapid economic development of outsourcing service in the era of international industrial transfer.

Furthermore, the articles from the Economy Times tells us that influenced by the economic slowdown in the United States, the Business Process Outsourcing (BPO) sector is growing and cashing in on the opportunity of more business. For the BPO sector, the US slowdown is the melting in the pot to look for more business in terms of opportunity. BPOVIA is one of the industry leading companies, which hold the chance.

With the booming demands overseas, obviously, as the statistics demonstrates, including ITO (Information Technology Outsourcing) and BPO, China undertook outsourcing services valued at 2 billion U.S dollars in 2007. Of all outsourcing enterprises, 14.2 percent of enterprises have received the Capability Maturity Model Integration III Certification. More than 30 million employees work in service outsourcing enterprises, among which over 250,000 are junior college or college graduates. The staff from BPOVIA are all graduated from prominent universities, and many of them own the international education background.

Accounting for more than 60 percent of total outsourcing services, information technology outsourcing services was the major part of China’s outsourcing industry in 2007. In addition, basic technology service and system application service are the major part of China’s ITO. Comparing with ITO, supply chain management and business process operation are major parts of China’s BPO. BPOVIA is the company which provides the service both on ITO and BPO.

As the trend of a large number of U.S ITO and BPO sectors are turning their eyes to other economies and non-US geographies to fill more space and the models of successfully-run Indian medium sized enterprises, we can optimistically estimate that there would be scores of Bangalore appearing in China. For example, BPOVIA, headquartered in Nanjing, China, largely extend its clients and promote its service, during the recession of the U.S economy.

However, we should not neglect the problems on the imbalance development of outsourcing service. Outsourcing contracts in Jiangsu, Guangdong, Beijing, Fujian, Shanghai, and other places are worth more than 100 million U.S. dollars. They account for two-thirds of total outsourcing services. Fourteen outsourcing service bases assume 80.1% of the entire nation’s outsourcing services. What’ more, China’s main contract countries and regions are the United States and Japan, and the outsourcing industry is mainly concentrated in the information transmission, computer services and software industries, making up 53 percent. Meanwhile, manufacturing services accounted for 30.7 percent of total outsourcing services. The development of other service outsourcing industries lags behind. Moreover, foreign-invested enterprises are the main force undertaking outsourced services. Thus, it will cost us a long period to build a balanced-developing outsourcing service market and overtake the competitors from other countries. BPOVIA has established an excellent role model to the industry, which is devoted to provide ubiquitous service, with its unique work team and universal spirits.

Popularity: 8%

China Outsourcing BPO, BPOVIA, ITO