German software giant SAP AG brings its toughest jobs to this port city in China's rustbelt northeast.

In a sunny office at a leafy business park, 200 technicians help run software that manages bank transactions in Switzerland and auto manufacturing in Michigan.

"Nighttime support for a Swiss bank is one of the most difficult things you can do, and we do it in China," said Andreas Reuther, SAP's vice president for global support.

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Modern offices fill Dalian's towers and are staffed by workers well versed in English, Japanese and sometimes Korean.

Along with SAP, Hewlett-Packard Co., IBM Corp., Britain's BT Group PLC, Japan's Yokogawa Electric Corp. and 230 other foreign companies have flocked to Dalian in the past decade. Now, a critical mass of development is coming. Ground was broken this year for a $2.5 billion Intel Corp. factory and a $6.5 billion nuclear power plant for the city. Cranes line the busy waterfront as skyscrapers rise at a furious pace.

A former Japanese colony on green rolling hills, Dalian is a model for the transformation that Chinese leaders want to see in the rest of their country. Beijing is eager to raise China's status from low-skilled factory labor to higher-paid technology jobs. A 15-year plan issued last year promises tax breaks and other aid to software, genetics, aerospace and other high-tech businesses.

"Our goal is to build up Dalian as a new leading city in global software and service outsourcing," said Jin Guowei, deputy director of Dalian's technology bureau. "We want to be like America's Silicon Valley, Ireland's Dublin or Bangalore in India."

Companies say they are drawn to Dalian by a polyglot work force, local spending on communication and other infrastructure, help in hiring, tax breaks for high-tech investment and free rent in the city's brick-and-glass office park. Wages for a new college graduate in Dalian are about $250 per month, company officials said -- about the same as in India but lower than in Beijing or Shanghai.

Investors say Bangalore is strangling itself by failing to invest in infrastructure, while Dalian spends heavily on roads, power supplies and telecommunications.

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Hewlett-Packard Co., IBM Corp and Britain's BT Group PLC are among the companies that have flocked to the bustling Chinese city of Dalian.

"It is becoming a city that is a good alternative to the major software outsourcing cities," said Conrad Chang, analyst for consultant IDC.

Private investment is also on the rise as more than 1,700 Chinese companies have sprung up in Dalian to produce software or to sell support to foreign companies doing business in the city.

Investors from Singapore and Hong Kong plan two more technology parks. And it's not just outsourcing but high-tech manufacturing, as at Intel's planned factory, that is fueling Dalian's boom.

SAP looked at Japan, Southeast Asia and Shanghai when it set out in 2003 to open an Asian support center, Reuther said.

"In Dalian, we find people with an IT background who can be 'skilled up,' and you can find people who speak reasonable English, good Japanese and even Korean," he said.

Foreign tech firms are drawn to Dalian in part because of its investments in roads, electricity and telecommunications.

HP, which opened in Dalian in 2004, now has 2,500 employees there doing business and technology work for clients in Japan, South Korea, Taiwan and elsewhere, according to general manager Chen Sheng.

The city's biggest weakness, company officials said, is a shortage of talent to fill the jobs, when 70,000 residents are employed in high-tech enterprises in Dalian. The government plans to double the annual number of high-tech graduates from the area's 40 colleges and universities to 80,000 by 2010.

It also sends recruiters to job fairs in Tokyo, Germany and the United States to lure Chinese-born experts with foreign experience.

Dalian's graduates are equal in quality to those of the United States or Ireland and "maybe a bit better," said Kirby Jefferson, the Intel plant's manager and a veteran of facilities in Ireland and the U.S.

And India's lead in English skills is shrinking as more people in China take language classes and deal with foreign customers, said Loh Tiak Koon, chief executive of software contractor hiSoft Corp., which has 3,000 employees in China.

"My prediction is that in three to five years, the language issue is going to go away," said Loh, who is from Singapore.

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