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China takes measures to boost service outsourcing

(Xinhua)
Updated: 2009-02-02 18:39

BEIJING -- The Chinese government has announced a raft of tax breaks and subsidies to encourage the growth of service outsourcing.

Undated file photo shows a worker in a toy factory in the city of Shenzhen, south China's Guangdong province. The Chinese government has announced a raft of tax breaks and subsidies to encourage the growth of service outsourcing. [Agencies]

The measures to boost the development of service outsourcing were outlined in a document drafted by the Ministry of Commerce (MOC) and approved by the State Council, China's Cabinet.

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It said 20 cities, including Beijing, Shanghai, Xi'an, Suzhou and Hangzhou, had been identified as pilot service outsourcing regions, where companies are eligible for favorable polices.

The measures include a series of tax and fiscal policies and intellectual property rights protection measures.

The document cited Suzhou Industrial Park as an example, saying service companies there would enjoy an enterprise income tax rate of 15 percent, compared with 25 percent elsewhere in the country, in the five years to 2013.

The government will offer service outsourcing companies a subsidy of up to 4,500 yuan a year for every college graduate employed on a contract of at least one year.

The document says businesses involved in information technology, training, production materials procurement, logistics, and advertising are eligible for the measure as service outsource providers.

Service outsourcing allows companies to transfer service operations to professional providers and focus on their core business. International service and software outsourcing business is expected to hit US$1.6 trillion by 2010.