5 Trends Defining Shared Services in China
Posted by kate.chan@dart-institute.com on October 12, 2016
China plays a significant role in the global shared services landscape, given the country’s significance for business growth. For many multinationals operating there, the most sensible strategy has been a "China-for-China" shared services model. In our report, we take a closer look at the data to compare salaries, attrition, costs, cycle times, quality, and more, to help you make the right sourcing decisions.
Here are five trends that define China's shared services market
1. Single function SSCs dominate
The vast majority [more than 2/3] of China-based SSCs are servicing a single function, whereby Finance predominates, with just about half of all centers offering Financial services, and "emerging" functions making up just over 7%.
2. Multinationals drive the market
Foreign-based multinationals make up the lion's share of the Chinese shared services market, which is growing 10% year on year.
3. Captive model most popular
The most popular sourcing model across Chinese shared services in the captive model, with hybrid making up just under a third of the total. Foreign headquartered companies are more likely to include outsourcing or leverage a hybrid model than China-based enterprises.
4. Foreign-headquartered companies are paying more for junior staff than Chinese companies
The median salary for junior staff is, on average, 1000 RMB (roughly 150 US dollars) higher in foreign enterprise SSCs than it is for Chinese-headquartered SSCs.
5. China-based enterprise SSCs achieve lower transactional costs than foreign-headquartered SSCs
While the largest segment of SSCs is achieving 5 to 10 RMB cost per invoice, China-headquartered SSCs beat foreign-headquartered SSCs on cost: for Chinese companies, 60% of SSCs achieve CPIs under 10 RMBs (compared to 48% of foreign-based enterprise SSCs). No Chinese-headquartered SSC shows costs above 30 RMB per invoice, whereas nearly 30% of foreign headquartered SSCs do.
Want to learn more?
Click here to see the full visual and interactive Benchmarking Analysis of Chinese Shared Service Centers. Find out which countries are driving the Chinese SSC boom, which geographies are being serviced from China, compare various cost/cycle time metrics, find out which locations offer opportunity for growth, and more.
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