TM in Chengdu: The Tianfu Software Park

Posted on 21 Nov 2012

As part of the Chengdu Provincial Government's plans to turn Chengdu into a world class hi-tech industrial centre, a software park has been created in the southern park of the Chengdu Hi-Tech Zone.

The inside of Damco's offices in the TSP

The building layout of the The Chengdu Tianfu Software Park (TSP) reminded me of a university campus, but on a much, much larger scale. Amenities, leisure facilities, R&D laboratories and office blocks are all within walking distance of each other, making it easy for people living and working in the park to completely avoid the often hellish traffic in central Chengdu.

One of the other journalists on the trip equated the TSP to being the equivalent of Canary Wharf to the City in London. Park of the southern high-tech zone, it is located near to Shuangliu International Airport, it has excellent transport links for internationals visiting the area, as well as making it easy for companies to export low-weight but high value products. Rail links to other Chinese cities are also well-developed compared to ten years ago.

According to Justin Zhai, vice-president of recruitment and training / information network, when the construction of the TSP is finished, it will cover an area of 3.7m square metres. On offer are state of the art research facilities, access to relatively cheap labour, a 15% tax break for ‘encouraged’ industries such as biomedical, biopharmaceutical, precision engineering, aerospace, composite/new material processing and a variety of other high-tech industry sub-sectors. The standard corporate tax rate across China is 25%.

The TSP is a was officially opened in 2005, and according to officials is the fastest growing professional software park in China. IBM has taken a particular interest in the area, as has Ubisoft, Siemens, Ericsson, PwC and SAP.

“The number of employees working here has already reached 40,000, and as more parts of the park are completed, and more facilities are constructed there is sure to be a rise in this figure,” said Mr Zhai.

One of the more impressive high-rise buildings that have been constructed in China over the past decade.

“There are also over 500 foreigners working here from 28 countries all over the world – it’s a great place to live and work, this is why they choose to stay! Chengdu is a place you will never want to leave,” he added.

The park has been funded exclusively by the Chengdu High-Tech Investment Group, which is a government institution, and is expected to cover over 2.2m square metres – what I thought was an extremely ambitious project.

When asked about whether or not companies that decided to invest in the park would have access to the right skills sets, Kevin Yang, general manager of business process improvement and operation at Damco, a global logistics company that has set up in the TSP pointed out that in Sichuan province there are over 90 universities, with 51 located in Chengdu itself.

“While we have a lot of universities, with 300,000 students graduating every year in Chengdu, there are also 660 technical and vocational colleges, which are often just as good at educating software engineers and scientists,” he explained.

“Around 60% of the 300,000 graduates study engineering-related degrees, and China has an outstanding reputation for producing graduates specialising in computer programming, coding and software writing.”

I asked whether or not the difference between working cultures could prove to be a barrier for some firms looking to come to the TSP, but Caroline Cul, deputy general manager of H.O.P.E at Damco assured me that this is very rarely the case: “Chinese students are fresh off the press, so to speak. By saying this I mean that they are usually willing to learn Western ways of working, while transferring some of their own cultural practices in the workplace.”

Ms Cul went on to say: “From looking at companies in the TSP that have already invested and have brought in Western managers, there are very rarely any problems, let alone serious ones.”

The TSP not only provides the hard infrastructure needed for businesses wanting to relocate here, but provides companies with a full range of HR services, including help with recruiting the right employees and training institutions.

It also has two online platforms that are there to help foreign companies access the talent pool on offer. One is called the Chengdu Software Talent Network, which is basically a database of over 200,000 CVs, and the E-college platform – containing information and registration on over 1,000 courses and has over 100,000 registered members.

The TSP is certainly an interesting place – and the various policy incentives that are in place to encourage foreign investment are wildly attractive. The infrastructure, facilities, quality of life are all huge pulling factors for UK manufacturers, but for the smaller niche manufacturers looking to take advantage of these benefits it seems to be slightly more difficult.

Also a lot of the benefits are negotiable – for companies with highly pollutive activities the same benefits do not apply. The kinds of companies that the TSP are trying to attract are the ones that will make it a global competitor – a new Silicon Valley, but one that specialises in a variety of high-tech engineering practices rather than just IT and computer software and hardware.

In the next blog post I will interview Jack Wang Jung, vice-president of  Chengdu Maipu International Infotech – a private Chinese manufacturer of internet routers and specialist software, and talk to Paul Sives, general manager of Proton Products, who relocated his manufacturing company’s operations to Chengdu over 20 years ago. The blog won’t be online until early next week, but stay tuned.