C.I. : How is DLSP structured in financial terms?
Yang Dong: ”Basically, DLSP is a private business real estate promoter belonging to the Chinese group Yida. Dalian Software Park, which was launched in 1998, is our very first operation. The terrain, which covers 15 km², belongs to the Chinese nation. We received financial aid from the government to the value of 5.5 million yuan (around 550,000 million euros). But we have developed our own management system which covers everything from renting gross floors areas to the construction and development of dedicated buildings. We also provide services such as recruiting qualified personnel with a view to helping companies set up their operations in Dalian. Not only in the field of IT, but also in marketing, the legal field, HR, sales, etc.”
C.I. : Do companies that set up here benefit from tax breaks?
Y.D.: ”Of course! Companies making their first profits are exempt for two years from tax on profits. For the three following years, they are taxed at only half the normal rate. Furthermore, such companies pay VAT at 3% rather than 17%. If they generate over 70% of their turnover in export markets, they pay company tax at a rate of only 10%, rather than 33%. And software and technology exports are also VAT-exempt. In the social field, employees benefit from reimbursements on income tax of 40-100% if their annual salary is over 60,000 yuan (approximately 6,000 euros). The idea is that, the higher the salary, the less tax the employee pays! Moreover, insofar as living standards are concerned, Dalian is a seaside town surrounded on three sides by tree-covered hills. And housing prices are very reasonable. You can buy a 100 m² apartment for between 30,000 and 45,000 euros. And Dalian has become a kind of “Summer Davos“: in September the World Economic Forum held a meeting there. The Forum focused on the “New IT Champions“ which are currently changing the global economic landscape.”
C.I. : Like India, it will be difficult for you to protect your current competitive advantage in terms of salaries …
Y.D.: ”It is precisely on this field that our strategy is radically different from India’s. The idea is to keep hold of this competitive advantage in terms of wage costs by successfully launching a series of new Silicon Valleys. That way we will be able to keep inflation under control by creating new competitive basins of employment. With this in mind, we have developed a strategy called “1,000-100-10”. “10” means 10 new centres – in fact, following the wishes of the central government, we will build 12 by 2015. “100” means that we want to attract 100 multinational from the “Fortune 500” list. Lastly, “1,000” means that China wants to use this dynamic to create 1,000 Chinese IT firms each employing over 1,000 people.”
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