The advancement of information technology has boosted the development of the global service industry, and the widespread availability of the Internet has greatly shortened the temporal and spatial distance between people. These preconditions have enabled outsourcing to gradually develop into the major theme on the world economic stage. In order to further optimize the industrial structure, develop export-oriented economy and improve the level and quality of foreign capital usage, China has put the focus of economic development on the outsourcing industry featured by knowledge-intensive service products. From 2005 until now, both the central and local governments have formulated a series of policies to promote the development of the outsourcing industry. This article aims to thoroughly introduce and analyze the nation’s policies concerning the outsourcing industry.

In 2005, a document entitled The Eleventh Five-Year Plan for the National Economic and Social Development was issued, which proposed to transform the economic growth mode and make great efforts to develop the outsourcing industry. In 2006, the Ministry of Commerce and other three ministries initiated the “1000-100-10 Project” which set a goal for the development of China’s outsourcing industry and made clear the development direction. The “1000-100-10 Project” is thus rated as a milestone in the development of outsourcing in China.

In 2007, the Ministry of Finance and the Ministry of Commerce co-issued a document numbered [2007]343, The Circular on the Development Fund Management in Relation to Undertaking International Outsourcing Businesses in 2007, which is beneficial to outsourcing enterprises and training institutions.

Following the document numbered [2007]7, Several Opinions of the State Council on Accelerating the Development of the Service Industry, in 2008 the General Office of the State Council formulated another document entitled Opinions of the General Office of the State Council on the Implementation of Policies and Measures to Accelerate the Development of the Outsourcing Industry, which elevated the undertaking of international outsourcing businesses to the focus of  expanding opening-up and promoting the development of the outsourcing industry from the level of central economic policies. In the same year, the Ministry of Finance and the Ministry of Commence co-issued a document numbered [2008]140, The Circular on the Development Fund Management in Relation to Undertaking International Outsourcing Businesses in 2008, which has enabled thousands of outsourcing enterprises and training institutions to acquire financial support.

With the approval of the State Council, in January of 2009, the General Office issued a document numbered [2009]9, The Reply to the Problems Concerning Promoting the Development of the Outsourcing Industry, which authorized 20 model outsourcing cities to do international outsourcing businesses and promote the development of the outsourcing industry. The model cities include Beijing, Tianjin, Shanghai, Chongqing, Dalian, Shenzhen, Guangzhou, Wuhan, Harbin, Chengdu, Nanjing, Xian, Jinan, Hangzhou, Hefei, Nanchang, Changsha, Daqing, Suzhou and Wuxi. 

During an outsourcing symposium held on February 2, 2009 in Nanjing, Jiangsu province, the vice premier of the State Council, Wang Qishan pointed out that it was an important decision of the State Council to accelerate the development of the outsourcing industry and that the government would strengthen its support for the outsourcing industry by making preferential policies in regard to fiscal capital, taxation, working-hour system, talent training, telecommunications services, and financing. The symposium set the tone of the government formulating relevant policies to promote the development of China’s outsourcing industry, which is of historic importance to the development of the industry.

To further implement the preferential policies formulated in the document numbered [2009]9, The Reply to the Problems Concerning Promoting the Development of the Outsourcing Industry, some relevant ministries also issued a series of policies in regard to such aspects as taxation, working-hour system, financial support, talent training, employment promotion, financial support, infrastructure environment improvement and information protection.

1. Taxation Policies

In the document The Reply of the General Office of the State Council to the Problems Concerning Promoting the Development of the Outsourcing Industry, it is put forward that the pilot policies in relation to taxation levied on the technology-advanced service enterprises of the Suzhou Industrial Park shall be continued and besides, from January 1, 2009 to December 31, 2013 qualified technology-advanced service enterprises shall be scaled corporate income tax with a 15% cut. Employee training expenditure shall be deducted by less than 8% of an enterprise’s total payroll before the corporate income tax is levied. The corporate income of offshore outsourcing businesses shall be exempt from the sales tax.
In April, 2009, the Ministry of Finance, the State Administration of Taxation, the Ministry of Commerce, the Ministry of Science & Technology and the National Development & Reform Commission jointly issued a document numbered [2009]63, The Circular on the Problems of Relevant Policies on Technology-advanced Enterprises, which set the scope of technology-advanced services including ITO, BPO, and KPO. The document also stipulated the scope of application and qualifications to accredit eligible enterprises.

2. Employment Promotion Policies

The Ministry of Education and the Ministry of Commerce jointly issued a document numbered [2009]5, Several Opinions of the Ministry of Education and Ministry of Commence on Strengthening the Cultivation of Outsourcing Talent and Promoting the Employment of College and University Graduates, which set a goal of cultivating and training 1.2 million outsourcing talent and employing 1 million college and university graduates within five years and establishing an outsourcing talent training system. The Ministry of Commerce and the Ministry of Education shall jointly accredit outsourcing training centers in the outsourcing model cities. The Ministry of Commerce and the Ministry of Education will establish an outsourcing talent pool together with some other relevant ministries to store more outsourcing talent and give more financial support to the training of outsourcing talent.

3. Financial Support Policies

The Ministry of Finance and the Ministry of Commerce issued a document numbered [2009]44, The Circular on the Development Fund Management in Relation to Undertaking International Outsourcing Businesses in 2009. Under the policies of the circular, an employee with an above junior college education, when hired by an outsourcing enterprise, must be engaged in work related to outsourcing and sign an over one-year contract. The state treasury shall grant enterprises a financial support of 4500 RMB for the training of each employee and grant accredited training centers 500 RMB for each trainee with an above junior college education and working in the outsourcing Industry. Also, it shall financially support outsourcing model cities for purchasing public service platform equipment as well as outsourcing enterprises for obtaining qualification certifications.

4. Special Working-Hour System Policies

The Ministry of Human Resources & Social Security and the Ministry of Commerce jointly issued a document numbered [2009]36, The Circular on the Problems in Relation to the Special Working-Hour System Implementation in Outsourcing Enterprises. According to the circular, in the 20 outsourcing model cities approved by the State Council, such as Beijing, Tianjin and Shanghai, technology-advanced outsourcing enterprises that meet the employment management standard but fail to implement the standard working-hour system in some of the posts, are permitted to adopt a special working-hour system with the approval of relevant ministries.

5. Policies to Improve the Infrastructure Environment for the Outsourcing Industry

The outsourcing industry has relatively high requirement on international communication, the Internet communication in particular. Huge traffic loads and high quality of the network are necessary. To meet the need of outsourcing enterprises, the Ministry of Industry and Information Technology issued a document numbered [2009]107, The Guidelines on Supporting International Communication Development of the Outsourcing Model Cities. According to the Guidelines, an international communication service guarantee program shall be formulated for the outsourcing model cities. Relevant basic communication enterprises shall rate outsourcing enterprises and industrial parks as major customers and provide them with high quality and efficient international communication services.

To implement the policies formulated in The Reply to the Problems Concerning Promoting the Development of the Outsourcing Industry by the General Office of the State Council and promote the development of the outsourcing industry in the central and western areas of the country, the General Office of the Ministry of Commerce issued a document numbered [2009]8, The Circular on the Interest Subsidy Policy by the State Treasury for the Outsourcing Infrastructure Construction in the National Economic and Technological Zones of the Central and Western Areas. According to the circular, project loans for the outsourcing infrastructure construction in the national economic and technological zones of the central and western areas can enjoy interest subsidies.

(The author is a researcher in China Council for International Investment Promotion)