The Rational Outsourcing Blog

Monday, May 21, 2007

No Entrance to Greenland (without English)

I took this picture when I visited Shanghai in 2002. I assume the Chinese text means “please don’t walk on the grass” or some variant thereof. The hilariously incorrect English translation may turn out to be prophetic though: can China gain entrance to the land of “green” (slang for money in America) without addressing their English problem? Probably not. However, there are three forces ameliorating China’s English problem:

  • The Chinese Government: A story in [part of the Financial Times group] entitled Battle of the behemoths explored the question of: “Will China upstage India and become the epicentre of offshoring?” While the article does say “In terms of talent, India will continue to score above China” it also highlights what China is doing to address the talent gap. “The Chinese government is driving long-term improvements, recently announcing plans to spend more than $5bn on language training to target the BPO market.” As I have mentioned in previous posts, the Chinese government has a track record of successfully spending its way to success. Building ahead of demand can be very risky but it can pay off. Is $5 Billion a large enough investment for China to catch up to India? Assuming a BPO industry headcount target of 1 million operators, this is $5000 per operator of English training. In China, I am sure $5000 buys you a lot of English training.

  • The Olympics: If you haven’t visited China recently, it will be very difficult for you to appreciate how important the Olympics are to the Chinese people. The Chinese are a very proud people, and they want to show off their country in the best light during the Olympics. As part of the preparations for the Olympics, they are investing heavily on English training for hotel staff, taxi drivers, and even shopkeepers. Previous Olympic hosts have ended up with excess hotels and sports arenas after the Olympics ended. China will probably end up with excess English-speaking citizens.

  • Chinese entrepreneurs: Some entrepreneurs are adopting very interesting process innovations to address the English problem. One leading Chinese BPO splits up every document into its smallest component parts. Thus, one of their operators only processes the ‘Social Security number’ field of every loan application while another processes only the ‘employer’ field. At this level of granularity, the skill required is not really English language skill, but rather symbol identification and transcription skill. The Chinese written language contains more than 3500 characters and thus the Chinese are exceptionally good at symbol identification and transcription. Of course, this solution only works for low-end data entry work because higher-order tasks such as Knowledge Process Outsourcing or even advanced BPO activities such as insurance claims adjudication can not be easily broken into minute components. However, low-end data entry work constitutes the majority of Business Process Outsourcing work today and most Chinese entrepreneurs would be happy to capture a significant proportion of this market away from India. [For details on Chinese characters, see the website of the Chinese Language Program at Harvard University: “The Xiandai Hanyu Changyongzi Biao (Modern Chinese Commonly-Used Word List), compiled by the national language committee and national education committee in 1987, includes the most frequently-used 2,500 characters, as well as the second most frequently-used 1,000 characters. Thus it comprises 3,500 characters altogether. Those who have received a junior or senior high school education should know and utilize these 3,500 most commonly-used characters.”]

Overall, I don’t think China has adequately addressed its English Achilles’ heel yet, but both the government and the people are aggressively trying to address this shortcoming. Anyone who ignores the Chinese threat to the Indian BPO industry on the basis of English language gap alone does so at their own peril.
Note: I wrote this post because of comments from reader Greg Cruey and a visitor from the “China Law Blog.” Keep the questions coming; I will try to answer them as soon as possible.

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  • maybe at the moment china cannot outdo india due to language barrier but with hardwork and the will to strive. china will sure make it to the global market just as they did now being the biggest and strongest nation at sleep that they are now... chinese are very much known to be very industrious and getting what they want.

    By Blogger Geoffx, at 2:53 PM  

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