IBM buildings in Dalian Software Park.

Dalian wants to become China's most mature and most competitive software hub by 2012, according to a senior official with the city government.

"The (software) strategy is an essential and powerful impetus for our future development," said Dailian Mayor Xia Deren, during the 2008 China International Software and Information Service Fair (CISIS) held there in June.

Dalian, a coastal city in northeast China's Liaoning province, is the host of the country's only State-level software fair. The software sector has boomed and has become one of the city's calling cards in the past 10 years, Xia says.

According to the mayor, the sales revenue of the city's software sector reached 21.5 billion yuan last year, up from less than 200 million yuan in 1998. During the period, the export volume rose from $10 million to $720 million, the number of software companies from 100 to more than 700, and the employees from 3,000 to over 60,000.

"In the past decade, our software sector has kept growing by 68.2 percent annually on average. It is becoming a new pillar industry for Dalian," Xia said.

"We are going to build Dalian into China's Bangalore (a software hub in India)," says Vice-Mayor Dai Yulin.

Though there is still a way to go for the city to catch up with Bangalore and Ireland's Dublin, Dai swears that in 10 years, Dalian will become one of the world's top software hubs.

Going global

More than 200 foreign software companies, including more than 40 Fortune 500 companies, have established businesses in Dalian.

"These companies bring advanced technologies, management ideas and innovation to Dalian," Xia said.

At the same time, the government is encouraging local companies to expand overseas. Some Dalian-based companies like Neusoft, DHC, and hiSoft have taken the cue and broadened their international business and the city gained a competitive advantage as a software export and service outsourcing center.

Dalian Hi-think Computer Technology Co Ltd (DHC) is a pioneer in developing Japan-oriented outsourcing business. It has maintained an annual increase of 25 percent over the past 10 years. Its software export volume ranks No 1 in the nation.

"We will accelerate our overseas expansion. We have set two strategies for that aim: getting listed in the stock market and cooperating with more multinationals," says Liu Jun, president of DHC.