September 27, 2007 -- In mid-September, Dalian Software Park started construction on its second phase of development. Dalian-based Yida Group and Hong Kong-based Shui On Group are to invest a total of 15 billion yuan (US$2 billion) in the expansion, and it is expected that the completion of the second phase will generate annual revenues of 10 billion yuan (US$1.33 billion).

"Dalian has the distinction of being the new leading city in the global software industry." Xia Deren, mayor of Dalian, said at the launch ceremony. "We will shape the course of preferential stratagem, further enhancing policy support, and creating a first-class environment for the software industry."

"Dalian was officially named the first and only 'Model City for the Internationalization of the Software Industry' in China. With Dalian Software Park set as its key base, Dalian is committed to software and IT as the pillar of its future economic development," Zhidan Xiao, manager of enterprise services center at Dalian Software Park, told Emerging China.

Established in 1999, Dalian Software Park is a key part of the development of the city of Dalian, a hub of the international IT industry in China. With an area covering 7.16 square kilometers, Dalian Software Park is one of the ten State-level software industry bases. According to an official statement by Dalian Software Park, its export volume is increasing by 100 percent annually. Over 300 enterprises, including more than 60 foreign companies, have settled their IT business in the park.

The software industry in Dalian has developed rapidly recent years. "Establishing Dalian Software Park is a crucial measure in servicing the IT industry of the city," Qi Zhou, spokeswoman, Dalian ChinaSoft Co., Ltd., told Emerging China.

According to Zhou, Dalian ChinaSoft is focusing on a Japanese outsourcing project set up at Dalian Software Park in 2001. Many companies including 32 Fortune 500 companies like GE, IBM, and Sony, have settled in Dalian Software Park. The mass research and development centers, call centers and outsourcing processing centers provide room for growth, he added

Dalian's infrastructure and climate has been attracting foreign enterprises.

"We are able to help companies start their offshore operations and focus on their core operation," Xiao said. The software park provides a full range of professional services ranging from basic property management to human resource services, to assist operations, he said. A newly established foreign-funded high-tech enterprise shall be exempted from income tax for the first two years.

"For the IT industry, in addition to the state level tax incentives, Dalian government also provides personal income tax refunds and lower pension costs for enterprises," Xiao said.

"The software Industry has been a major backbone of the economic development of Dalian," Jianhong Xue, Associate Professor at Liaoning Normal University, said in a research report on Dalian Software Industry. "There are many advantages in developing this industry in Dalian, including the city's environment, government policy, human resource, and so on. With the country's policy of "rallying the old industry base of the Northeast", Dalian is developing the domestic market through international IT outsourcing business, enhancing the competitive power of the whole industry."