Hong Kong-listed Digital China officially opened its new East China headquarters in Shanghai yesterday, which will become the hub of its software outsourcing and system integration business in the country.

China's largest information product distributor invested 100 million yuan (US$12.05 million) to build the 15,000-square-meters facility in Changning District.

"We will emphasize more to develop our software outsource business in the new headquarters," said Hu Deqiang, general manager of Shanghai Digital China Limited. "More than 70 percent of our 1,000 Shanghai employees belong to our software and system integration departments."

Last month, Digital China signed a contract with a branch of General Electric Co and a Japanese company to establish a joint venture with a US$3 million registered capital. China Digital has a 55 percent stake in the venture, which aims to offer software outsourcing and system integration services.

"The global software outsource market is growing rapidly and it is easy to keep Digital China's software business profitable," said Zhang Shiwei, a senior analyst at IT consultant Analysys Co Ltd.

By the end of last year, Shanghai's software exports tripled to US$175 million from that of 2000. Most of the export revenue came from software outsourcing ordered by companies in Japan, Europe and the United States, said the Shanghai Foreign Economic Relations and Trade Commission.

"But Digital China won't be out of the woods in the third quarter because its new business now contributes very little to its revenue," Zhang added.

In the second quarter ended on June 30, Digital China lost HK$149 million (US$19.10 million), said Chief Executive Guo Wei.

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