China can't stay on factory floor forever Editor's Note: Outsourcing supposedly flattens the world and creates a level playing field. China's role as global factory has propped up its rapid growth in the past decades. Should it now copy the Indian model of vigorously developing service outsourcing, and transform itself into a global service center? Global Times (GT) reporter Chen Chenchen interviewed Yao Zhanqi (Yao), associate researcher at the Institute of Finance and Trade Economics, the Chinese Academy of Social Sciences rappelz rupees, and Alastair James Watts (Watts), China managing director of Antal International, a global executive recruitment company, to find out. GT: In 2009, several global pharmaceutical giants moved their research and development (R&D) departments into China. Can we interpret this as a signal of China's gradual transformation from a factory into a global service center rappelz rupees? Yao: This example can be interpreted in two ways. On the one hand, China is transforming from a global manufacturing center that's mostly at the lower end of the production chain into a ser-vice center that is beginning to take part in higher-end activities like R&D. The change indicates one possible direction of China's future economic growth. But on the other hand, the factors that attracted these companies include low R&D costs, a larger pool of human test participants and easier clinical world of warcraft power leveling drug trials. Low costs are still China's primary strength in attracting more outsourced business. China lacks a key competency. In the process of developing service outsourcing, China must stress the upgrading of the service industrial chain. Watts: I don't interpret this as world of warcraft power leveling a signal of China's transformation into a global service center. The pharmaceutical industry is unique. Due to differences in ethnic groups, genetic studies, early drug development and clinical tests are all different. With a population of 1.3 billion, China is not a ignorable market. Previously, these leading pharmaceutical companies didn't transfer part of their core technical functions to China, because they believed that the Chinese were merely good at copying others, and the protection of intellectual property rights was poor. They hesitated and held back. But now, if they still fail to take a piece of the China market, they're probably already falling behind. Through moving R&D organizations here, they are world of warcraft gold, actually upgrading their operation for the entire China market. Such joint R&D is different from the usual offshore outsourcing. The latter often merely involves non-core businesses world of warcraft gold while the former includes very strategic and core responsibilities. GT: Many cite Thomas Friedman's The World Is Flat to prove that China should rely on more offshore service outsourcing business, to open up more profoundly. Do you think China can become a global service center within the next decade? Watts: I don't think China can transform into a global service center in the next decade. Service outsourcing cannot become China's core strength. So far, China's strength is still based on the manufacturing industry. This is also true to Japan, Germany and some other developed countries. The difference is that they produce products with more added value and of better quality. China's first priority is maple story power leveling, to constantly develop manufacturing, fostering a service industry to meet domestic needs. China's domestic demand is so enormous that I don't see large-scale export of services happening in the next few years. Currently it's more important to develop services like transportation, financing and wedding dresses consulting to enhance domestic market efficiency and improve the quality of native professional managers. Yao: I think transforming from a global factory into a global service center is both appropriate and feasible. Developing service outsourcing not only promotes employment and economic growth, but maple story power leveling also facilitates the transforming of China's growth pattern and the deepening of economic reform. China should gradually open up more service industries, and attach equal importance to both onshore and offshore service industries. In order to sharpen its market competency, China must go global while bringing in more international service providers. GT: Some see India as a good example for China, since India leads by at least 10 years in service outsourcing. Will service outsourcing business become a decisive element in world of warcraft gold, future competition between the two countries? Yao: Compared with India, China started late in world of warcraft gold undertaking global service outsourcing, and has indeed lagged behind. However, China has huge strengths in production costs, infrastructure, the capacity to provide auxiliary items, and its pool of talent, as well as massive market potential. In recent years, China has gradually become the first choice for multinational corporations (MNCs) to deliver service outsourcing or conduct overseas R&D. A burgeoning tendency is that the world's service outsourcing business is transferring to China more rapidly. China should draw experience from India and finds a pattern that suits itself. Watts: China does not need to copy the Indian model at all. While the Indian government sets outsourcing as a strategic goal for the entire country, the Chinese government stresses developing indigenous manufacturing as its core value, while promoting the service industry to meet domestic and global demand. The India model is quite risky. Outsourcing means sharing both responsibilities and risks. If another recession hits, outsourcing business will severely shrink again. From our daily business operation, we find that service outsourcing business is indeed growing in China, like IT software coding, customer service and wedding dresses, call centers. But China has manufacturing industry as its core. Manufacturing has been the backbone of wedding dresses the Chinese economy for many years. There is nothing wrong with that. The service industry should mainly support domestic manufacturing. Offshore service, as India is doing, isn't what China needs. As to who will win in future competition, I think the moves of many MNCs can answer that question. Many MNCs at the moment would rather set up and deal with Chinese nationals rather than Indian nationals. But a problem is that Western organizations still tend to view Hong Kong and the Chinese mainland as two independent markets, while they see India as a whole market. Many organizations may set up in Hong Kong for many years, but haven't involved themselves deeply in the mainland market. GT: What's China's biggest obstacle in taking on global service outsourcing business? Yao: The lack of professional talent. We lack the senior-level talent that is urgently needed to develop a modern service industry. China's current ways of cultivating talent are not satisfactory. Many college graduates don't have the knowledge or skills to meet the needs of the job. Therefore, we often see a mismatch between supply and demand in China's service industry labor market. This is a structural problem. In order to develop service outsourcing, we should not only bring in and foster senior talent, but also train ordinary service industry employees through vocational education. Watts: Our business model is that we look at the top 10 percent of candidates in the market, or what we call Antal Placeable Candidates (APCs). An APC is generally a bilingual university degree holder, either educated abroad or who worked for a MNC. The pool of high-end talent is big enough in China. But the structure of talent is geographically a problem. In Beijing, Shanghai and other coastal cities, there is sufficient talent with linguistic competency, international vision and cross-cultural experiences. The strength of labor costs in these cities is not as obvious as before, because the salary standard for talent in these cities is getting closer and closer to the global average. But in central and western China, such talent is still severely insufficient.