I’m not familiar with Probe International, so I can’t make any judgments regarding the veracity of this very provocative article.  However, given the rather strident nature of their self description, I’m guessing that they have some pretty sharp axes to grind.  The actual report from Probe International is available here (PDF).

“BEIJING (AFP) - Beijing’s water crisis is so critical that the city is facing economic collapse and the need to resettle part of its population in coming decades, a leading development policy group said Friday.

Experts predict the Chinese capital could run out of water in five to 10 years, according to Grainne Ryder, policy director at Canada-based Probe International.

She said Beijing would potentially have to start shutting down industry, as the city would be incapable of supporting current levels of infrastructure or population.”

Of course, the government doesn’t quite agree with Ms. Ryder:

“But Jiang Wenlai, a professor at the Chinese Academy of Agricultural Sciences, said he thought the comments were exaggerated.”

The thing is, we all know that water, or shortages thereof, is the next big environmental crisis to hit most of the world.  Perhaps we should be expending as much effort, resources and thought on the challenges of wastewater reclamation and water purification as we are on alternative energies.

Technorati Tags:  China, Alternative Energy, Solar, Wind Power, BioFuel

The New Statesman’s Linsey Hilsum wrote a great piece on the changing of the guard among the world’s economic powers.  She writes from a British perspective, which seems to add a bit of poignancy to her comments.  Although her article doesn’t present much brand new material, she does a great job of putting things into a proper perspective.  I was particularly compelled by the use of her experience in the Dubai International Airport (DXB) as a foundation for the story.

While the whole piece is well worth reading, one bit particularly struck a nerve with me.  Being a somewhat rational engineer type, I rarely yell at the TV, since I do understand the difference between broadcast and bi-directional communications.  However, there is one fellow that I never fail to scream back at:

In the US, the anti-foreigner right has made common cause with labour unions to deny reality. The champion of this view is the CNN commentator Lou Dobbs, who sees American culture being swept away by a tide of immigration from the south while American jobs go to “communist China”, as he always call it. Economic studies show that service-sector jobs in Europe and the US have increased as manufacturing jobs have been lost, and that western companies and economies have benefited from outsourcing and globalisation. Europe and the US need immigrants to replace their ageing populations. That the US is no longer economically dominant does not mean it’s about to collapse - but fear rather than logic dominates the debate.

The truth is, I actually find myself watching CNN much less simply because they carry Mr. Dobbs’ bizarre ranting.  It’s too bad, because I sincerely appreciate Mr. Turner’s brilliant innovation in creating the network nearly 30 years ago.

Personal quirks aside, this shift is real, and we can either leverage it, or get buried by it.

Technorati Tags:  China, China Outsourcing

I always wonder whether organizations like Oxfam are actually stating scientific fact, as opposed to pushing an agenda, but this makes a great headline.  According to a recent report from the organization:

“Biofuel mandates and support measures in rich countries are driving up food prices as they divert more and more food crops and agricultural land into fuel production. Meanwhile sugarcane ethanol from Brazil, production of which has a far less significant impact on global food prices, is excluded through the use of tariffs.

The World Bank estimates that the price of food has increased by 83 per cent in the last three years. For the world’s poor people, who may spend 50–80 per cent of their income on food, this is disastrous. Oxfam estimates that the livelihoods of at least 290 million people are immediately threatened by the food crisis, and the Bank estimates that 100 million people have already fallen into poverty as a result. Thirty per cent of price increases are attributable to biofuels, suggesting biofuels have endangered the livelihoods of nearly 100 million people and dragged over 30 million into poverty.”

This point is well understood.  Everyone except politicians, corn farmers and ethanol producers seems to believe that using food crops to power our cars and trucks is a sub-optimal solution.  As China struggles with dramatically higher fuel costs and accelerating environmental damage that could render the country untenable, the government will be forced to evaluate alternative energy solutions including wind, solar and biofuels.  We can only hope that progress towards producing biofuels from non-food sources will be realized fast enough to provide them with viable alternatives.  Unfortunately, as nearly as I can tell, commercial quantities of fuel from algae is still a ways off, but we’re working on it.  Of course, there is always Triadica sebifera, the Chinese tallow tree (just kidding - don’t flame me).

Technorati Tags:  China, Alternative Energy, Solar, Wind Power, BioFuel

The Brown-Wilson Group recently released its 2008 Black Book ‘State of the Outsourcing Industry Report’ (if your browser has problems with the URL format, try here).  If you’re even thinking about worldsourcing, this report deserves your consideration.

Twelve (12) U.S. outsourcing firms made the report’s “Top 20″ list.  Five (5) Indian organizations were on the list.  This report is interesting because it is based on input from actual users of outsourcing services.  According to the Brown-Wilson blurb:

“Brown-Wilson Group annually evaluates leading global outsourcing service providers across 26 management criteria and 18 operational excellence key performance indicators completely from the perspective of the client experience.”

It’s disappointing to note that no Chinese companies made the report’s list of the “Top 50″ companies.  Here’s an excerpt from their report that attempts to explain the absence.

“China has an unparalleled wealth of highly skilled labor and solid infrastructure to place it atop most short lists for offshoring engagements. Based on recent client satisfaction outcomes, however, the majority of those outsourcing decision-makers will not rank China as their first choice for upcoming initiatives anytime soon. How big this trend of caution will be, however, remains unclear. Revenues are increasing for China’s technology providers but hardly touch a fraction of the huge global offshoring market share. Clients currently agree that too many barriers exist for China to take India’s place as offshoring destination of choice.

2006’s Black Book Top 50 rankings included Freeborders, an information technology solutions supplier as the first China outsourcing firm to enter the ranks, but has not reappeared. Some software & IT outsourcing vendors have come close: Dextrys (formerly DarwinSuzoft), Achievo, Bleum, Neusoft, IT United, Objectiva, and Symbio Group all have done well again as reported by customers, but the level of client satisfaction has not been maintained over long periods as have other offshore suppliers and to grand heights of approval.

Customer-provided grades in work quality and staff dedication are extremely high but clients complain of several crucial issues keeping China outsourcing vendors from receiving top satisfaction scores. On top of a fragmented market, China still lacks outsourcing management talent, along with problems with intellectual property protection, differences in culture, poor English language skills, and sparsely found project management expertise especially in outsourcing. Having to tread carefully with these concerns is causing clients to reconsider these suppliers until more intrepid competitors substantiate successes in China.”

They even twist the knife a bit more with this comment:

“We expect to see the US and Central/Eastern Europe to [sic] replace China in this period of evolution for European destination preferences.”

One point they made in the report’s executive summary also resonates with what I’m hearing from an increasing number of prospective clients:

“Receiving the most fervent customer disapproval this year are outsourcing firms who have placed the majority of their company’s workforce offshore without maintaining adequately supported US based ventures.”

We still have some work to do…

Technorati Tags:  China, China Outsourcing

This has been all over the news today.  The yuan/USD ratio reached 6.8823 - a new low for the dollar.  I just went back to check - the ratio that we used to calculate travel expenses and contracts five years ago was 8.28.  This is clearly bad news for China’s U.S. focused outsourcing vendors.  They’re seeing lower rates driven by both increased competition and the weakening market in the U.S.  At the same time, their costs are increasing, especially in Beijing / Shanghai.  Finally, the currency that they’re getting paid in (U.S. $) is worth less in the currency that they’re using to pay staff & expenses (RMB). 

Here’re some excerpts from the coverage in Time:

“The yuan has gained about 20 percent against the U.S. dollar since Beijing revamped its foreign exchange trading system in July 2005, revaluing the currency by 2.1 percent to 8.11 yuan to one dollar.

On Wednesday, the Chinese yuan began trading at a 6.8823, continuing a steady advance against the dollar that has taken it to fresh highs in recent weeks.”

If you’re a U.S. client with locked-in dollar denominated rates, you ought to be having a conversation with your vendor.  I can promise you that the vendors will find a way to work this into their business.  You will be much better served by proactively being part of the process than by being a victim of the process.  Stay on top of this.

Technorati Tags:  China, China Outsourcing

The Netherlands Environmental Assessment Agency (PBL) released a report last week stating that China now produces more carbon dioxide than the traditional front-runner, the U.S.  The NY Times carried a great post on the report. According to their news release (also here, but this server seems to be unreliable):

“With an eight percent national increase, China’s carbon dioxide emissions contributed the bulk of last year’s 3.1 percent global rise in CO2 emissions, according to a statement released on the last day of a United Nations conference on climate change in Bonn, Germany.”

Specifically, the report pegs China’s contribution at:

“…about a quarter share in global CO2 emissions (24 percent)…”

It gets worse…

“Cement clinker production was a major cause of the emissions, and with an increase of 10 percent in 2007 China now accounted for about 51 percent of global cement production, said the PBL.”

…Rebuilding after the earthquake in Sichuan province will result in an even greater demand for cement.

While alternative energy is a hot topic in the west right now, we don’t hear as much about alt-energy developments in China.   I don’t know whether this reflects a lack of progress, or simply a dearth of reporting.   In any event, I’m starting to work with some other folks interested in increasing alternative energy production in China.   I’ll report more as I learn more.

Technorati Tags:  China, Alternative Energy, Solar, Wind Power, BioFuel

The irony of this story caught my attention:

“Beijing: An outsourcing centre to streamline the application process for Indian visa was inaugurated at Guanzhou city in Guangdong province on Friday.

The process of applying for an Indian visa will be outsourced to the new India Visa Application Centre, Consul General of India Gautam Bambawale said at a function in Guanzhou.

The inauguration of the centre comes a week after the new Consulate General of India was opened in Guangzhou.

The centre, to be run by GZL International in consultation with VFS Global Services, will commence operations from June 16, catering to visa applicants from Guangdong, Yunnan, Sichuan, Fujian, Hainan and Hunan provinces and Guangxi Zhuang Autonomous Region. “We at the Consulate General of India, Guangzhou, are already issuing about 100 visas every day. We expect this figure to grow exponentially in the coming months,” Mr. Bambawale said.”

Beyond the obvious point that the Indian government is outsourcing visa processing to a Chinese company, I think that this story illustrates the truly global nature of China’s aspirations.  Chinese businesses clearly view India as both a place to learn from and a rapidly developing market.  At this moment, there are probably discussions in Chinese offices that start off something like this, “India has 1.13 billion people. If we could get each of them to buy 10 RMB worth of our wonderful stuff…”

Technorati Tags:  India, Globalization, China, China Outsourcing

Mr. William J. Amelio, the president and CEO of Lenovo wrote a very thought provoking article in CIO Today (the page with the article seems to display strangely some of the time.  Once you get past the first display advertisement, you may encounter an advertisement appearing to fill the whole page.  You might need to scroll down to get to the article).

I completely agree with Mr. Amelio’s basic premise.  Global businesses do indeed need to think about leveraging, and serving, the entire world.  Specifically, he points out that:

“Over the next several years, virtually any global company’s success will depend on its willingness to reorient its view of the world map. This attitudinal — and longitudinal — shift will have enormous ramifications for business leaders, employees, and customers alike.”

He cautions that:

“Those who refuse to believe that the developing world is redefining the marketplace are shortsighted, bordering on arrogant.”

He could have added “non-competitive.”  The article continues with counsel for specific constituencies:

“Business leaders should start looking in emerging markets for answers if they hope to find the “secret sauce” needed to harness the economic explosion in this new world order. They need to spin the map around and look at it from a Pacific-centric view. This is where worldsourcing plays a role. A distributed global management approach is required to make a company nimble enough to reconfigure its resources and talent in real time so it can respond to rapid shifts in local market demand. You can’t get a feel for such shifts from an isolated corporate HQ. To truly grasp the nuance of local market dynamics, you need operational staff who know the cultures and norms. In addition to ensuring that your supply chain remains efficient, this will help you gauge and respond to cultural shifts that portend market demand changes.”

Mr. Amelio also has advice for the folks “in the trenches:”

“It [global sourcing] turns strategies such as outsourcing and offshoring on their heads; it’s about embracing and enfranchising local talent in markets everywhere to capitalize on the best ideas from all pockets of a company. No doubt, globalization has consequences in terms of job movement, but that’s inevitable in a highly competitive world economy. If you’re working for a multinational company, you’re competing against skill sets in countries around the world, but your job aptitude and career choices will no longer be limited by your geographic location. Employees who embrace this movement and look for ways to collaborate and contribute their best thinking, thereby driving and fostering innovation and better ways of doing business, will put themselves in career-growth situations — the antithesis of career stagnation.”

This article gets it pretty close to exactly right.  Organizations need to make global decisions.  They must carefully assess the resources available in each region as well as the local markets.  Software outsourcing decisions can’t be bases simply on cost anymore (actually, this was never a great idea).  Instead, you need to consider each region’s technical skills, capabilities for innovation and access to the local markets.

Technorati Tags:  Worldsourcing, Globalization, China, China Outsourcing

I noted some of the management changes at hiSoft in a post last week.  At the time, information about Mr. Li Yuan-Ming’s destination wasn’t readily available.  Thanks to the China Daily, we now have a bit more information.  Apparently he has founded a new, Dalian based, outsourcing company to focus on providing services to Japanese clients.

‘Dalian Presoft Co Ltd, intended to boost the booming software industry of Dalian, a coastal city in Northeast China’s Liaoning Province, was formally launched Friday.

“The new company is dedicated to being a bridge between Japanese customers and Chinese service providers in the IT sector,” said Presoft president Li Yuanming.

In this role, Presoft will focus on IT services and training for its Japanese and Chinese partners, Li said.

“With a staff of more than 540 people, we are confident that we can double our output value every year for the next three years. It is expected to be 70 million yuan ($10 million) this year, and reach $50 million by 2010,” Li said.’

It sounds like Mr. Li Yuan-Ming wishes to continue to focus on Japan, while, as suggested in the earlier post, hiSoft’s current management was intent on pursuing western business.  Dalian is certainly the right location for a Japan oriented company.  Hopefully, these moves will allow hiSoft to become even more competitive in serving western clients.

Technorati Tags:  China, China Outsourcing

The New York Times did a short piece on some of China’s suggested parameters for foreigners planning to attend the upcoming Olympic games.

Some of the key bits of guidance include:

“Do not bring any printed materials critical of China. Do not plan on holding any rallies or demonstrations in China. Do not think that you are guaranteed an entry visa because you hold tickets to an Olympic event. And do not even think about smuggling opium into China.”

At least that’s what the New York Times tells us.  The rules are apparently posted on the Beijing Organizing Committee’s website, but only in Chinese.  I don’t know whether to chuckle, or feel a bit discouraged by the fact that this advice, which is clearly just common sense, probably does need to be issued.  Sigh…

Technorati Tags:  China, China Olympics