Softpark gets into a consolidation mode

DALIAN: Despite the global economic downturn, local IT companies in this port city in Northeast China's Liaoning province are seeing even more opportunities to confront the competition.

Softpark Consultancies & Services Co Ltd (SPCS), a software provider in Dalian, recently merged with two Japanese companies, AITACA and NIC.

"By merging quality companies, we can grow rapidly," said Zheng Shiyu, CEO of Dalian Yidatec Co Ltd, at a ceremony to rename SPCS as Yidatec on Jan 16.

"We will keep conducting mergers and acquisitions in the coming two years and forge our own advantages," said Zheng.

Zheng was supported by Sun Yinhuan, president of Dalian Yida Group Co Ltd, the parent company of Yidatec.

According to Sun, the current financial crisis provides a major opportunity for China's software and service outsourcing sector, as more multinational companies tend to outsource non-core business that can be done more cheaply in low-cost countries,.

"Currently, many companies are undervalued. It is a good chance for us to conduct merger and acquisition even in the coming two years," he said.

Liu Jun, president of Dalian Hi-Think Computer Technologies (DHC) Co Ltd, said market pressure brought by the global downturn may be good for the healthy development of the sector in the long run.

"It can help squeeze the bubbles. Companies that have survived the crisis will enjoy better development," he said.

Liu said DHC will expand the market, cut costs, strengthen management and rationalize staffing in order to confront the global financial crisis.

Dalian is a leading player in China's IT outsourcing sector.

Preliminary statistics from Dalian Information Industry Bureau show that sales revenue of the city's software and service outsourcing sector in 2008 reached 30.6 billion yuan, up 42.3 percent year-on-year. Exports were $1.05 billion, up 47.4 percent.

(China Daily 01/24/2009 page10)