Pansoft JV first step to Japanese mobile software outsourcing(Aug 25, 2010)

by Yan Xinyi

Shanghai, August 25. INTERFAX-CHINA - Pansoft Co. Ltd., a Nasdaq-listed enterprise software services provider, announced that it will invest RMB 18 million ($2.7 million) to set up a joint venture (JV) with two Japanese companies in order to enter Japan's mobile software outsourcing market, the company announced on Aug. 24.

According to the announcement, Pansoft will hold an 80 percent stake in the JV named Pansoft (Japan) Co. Ltd. with the remaining stakes going to Management Information Center Co. Ltd. (MIC) and Seven Colors Corp.

The JV will test 3G mobile software for Japanese electronics giant Sharp Corp. at Pansoft's headquarters in Jinan City, Shandong Province, the announcement said.

The JV is the first step of what is potentially a major move for Pansoft into mobile software outsourcing for the Japanese market, Pansoft's board chairman, Hugh Wang, told Interfax on Aug. 25.

Wang estimated that Pansoft Japan currently accounts for 10 to 20 percent of Sharp's software testing business. He anticipates that Pansoft will be able to secure more outsourcing contracts from Sharp and other Japanese IT companies in future due to their competitive prices.

"In recent years, an increasing number of Japanese companies have outsourced their labor-intensive information technology (IT) projects to China to trim hefty labor costs," Wang said. He estimated that the cost of mobile software testing per employer in China is roughly one seventh of that in Japan.

Favorable policies in China have also encouraged software outsourcing, Wang said. For example, offshore outsourcing businesses based in 21 Chinese cities will not be required to pay operating taxes until 2013. Other recent policies include low import taxes on equipment and employment subsidies for the outsourcing sector.

Pansoft provides enterprise resource planning (ERP) software services for domestic oil and gas companies including PetroChina Co. Ltd. and Sinopec Corp.