The Risks and Potential Rewards of Doing Business with China

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    Yesterday, I said I’d be drilling down on the China analysis that’s part of the Global Outsourcing Report.

    Here are the risks inherent in setting up shop or working with a service provider based in China that stand out to me in the report:

    • The conflict with Taiwan is a biggie.
    • Corruption is rampant, especially as you get farther away from Beijing.
    • There’s a fear that the Chinese government could seize your business.
    • Chinese culture is much further from Western culture than India.
    • There’s bad intellectual property protection.
    • There’s a copy-cat mentality.
    • Tax grace periods are expiring.
    • Power outages exist even in the biggest cities.

    Here are the promising points:

    • The marketing opportunities are to slobber over.
    • There’s a labor force of 778 million, although there are only about 200,000 people working in IT currently.
    • There are almost more students of the English language in China than there are in Great Britain.
    • Real estate costs are low.
    • There are strong skills among the IT labor force in writing custom software.
    • Many organizations already have outsourcing ties to Chinese companies through their manufacturing/production operations.

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