Telemarketing Japan Enters Chinese Call Center Market

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Telemarketing Japan Inc. in December will open one of China's largest call centers in Shanghai, targeting U.S. and Japanese companies seeking cheaper alternatives to their English home-market operations as well as catering to Chinese- and Japanese-speaking customer bases in China and overseas.


Called the Shanghai First Mega Customer Contact Center, the outsourcing operation will employ 600 representatives on 280 seats. Value Communications Services (Shanghai) Inc., a Telemarketing Japan subsidiary, will run the center.


"Shanghai is the logical choice for us, as it has a superior telecom and business infrastructure," said Taro Fujinaka, business development manager for international sales at Telemarketing Japan, Tokyo. "In addition, Shanghai is the most internationalized and globally active city in China, and it is the best place in China to find all of the language skills we need, not just for English and Japanese, but also the many Chinese dialects."


The company is negotiating with an undisclosed number of firms. Firm contracts are expected in the next quarter.


"At first the center will focus on serving the U.S. market, providing teleservices in Chinese, Japanese and English," Fujinaka said. "Telemarketing Japan also predicts strong demand in the local Chinese market, especially the major cities, and intends to establish ourselves early on in these high-income zones."


Though often hyped, China's consumer base is narrower than expected. But average per-capita retail sales in the eastern and southern coastal cities already exceeds $1,208, according to Telemarketing Japan. Shanghai alone has a population of 14 million, suggesting a retail consumer market of $2.3 billion a year.


Direct marketing, too, is in its infancy in China. But Fujinaka expects to see rapid growth in the next two or three years, especially in coastal cities like Shanghai.


Still, the country's estimated $1 billion call center market is fragmented. China claimed about 37 outsourced call-center operators in 2000, with the total number of reps at 3,200. In the same year, there were more than 79,300 seats for call centers, excluding agents for call centers of paging companies.


"Because the market of the Chinese outsourcing call center industry is in a rapid-growing stage of its formative period, there does exist some uncertainty as to the tendencies and speed of its future development," Fujinaka said.


One estimate, he said, pegs the average annual growth at 33 percent for the next four years.


Various factors will fuel such development: a spurt in the growth of the Chinese economy and the increasing penetration of telephone lines year over year. Other drivers include the decrease of telecommunication-related fees, the steady adaptation of the Internet, and the rising competition among teleservices companies.


About seven major players cater to the outsourced Chinese call-center market.


TCY and Sykes each have 50 booths. Interactive Technology Services, Info 95 and Television Shopping Network have roughly 100 booths apiece. Shanghai Telecom has nearly 200 booths in one location and another 80 elsewhere. Vision-X's numbers are not known, but it could be larger than the others.


Another major call center, albeit in-house, is GE Capital's. The company has credit card operations in Dalian, China, that focus on Japan. Its strength is unknown.


Telemarketing Japan claims to have several unique selling points. The company not only will charge competitively, but also boast a larger scale than rivals. It says it will pay close attention to quality of service, data security and consistency and the abilities of reps.


"It will also be important to recognize differences in management styles," Fujinaka said. "It will simply not work to drag and drop Japanese or American call center management paradigms and expect smooth operations will naturally ensue. The local management team needs to be composed of Chinese professionals with an understanding of international quality standards and business practices."


A wholly owned subsidiary of Benesse Corp., Telemarketing Japan claims to be one of the top five teleservices bureaus in Japan. Last year it handled 13 million inbound calls and 7.6 million outbound calls for 200 clients. More than 20 percent of its $126 million in revenue last year came from foreign companies.


For the Shanghai call center, Telemarketing Japan has invested $1.15 million in its local Value Communications Services subsidiary. It expects the investment to rise with growth in sales.


"Sales-wise, we're still being conservative, expecting less than $1 million in 2003," Fujinaka said. "Eventually, though, we'd like for Value Communications Services to be the premier gateway to the Chinese market for foreign multinationals as we've done here in Japan."


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