- Language: English
- Published: April 2012
- Region: China, Global
China Information Technology Report Q4 2011
- Published: October 2011
- Region: China
- 67 Pages
- Business Monitor International
Business Monitor International's China's Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on China's information technology industry.
IT spending is forecast to reach US$104.5bn in 2011, increasing to US$174.9bn by 2015. Despite an expected moderation in investment and retail spending over the next year, an expansion in consumer credit and modernisation drive in sectors such as education, healthcare, and manufacturing will help sustain market growth.
Total Chinese IT spending is projected to grow at a CAGR of 13% over the five-year forecast period. Spending growth is also forecast at around 13% in 2011, which represents a slight slowdown compared with 2010, as an expected monetary tightening restrains IT investment. Rural areas and lower-tier cities and towns will be among the fastest growing segment of the PC market. Multinational vendors will receive a boost in 2011 from a 50% increase in import tariffs on some electronics products, such as laptops.
Several factors, including a vast potential rural market, government spending, and gradual modernisation in sectors such as education, healthcare, and manufacturing will help sustain market growth. Growing interest in cloud computing will drive vendor investment and attract new players into the market and will be further stimulated by the 2010 launch of government pilot programmes.
In January 2011, the government introduced a 50% cut in import tariffs on some electronics products, such as laptops. The Ministry of Finance announced that the import tariff on computers, as well as other electronics devices such as digital cameras, would fall from 20% to 10% as of January 27 2011. The tax move was presented as helping China fulfil its promise to the WTO.
E-government services in China are continuing to develop at a provincial level, with online services being delivered by more local government departments and organisations. In Fujian province in 2011, the local government was implementing a new portal for services including healthcare, social security, and education, which are provided for up to 300mn citizens. Those in rural areas can access the services through kiosks in community centres and other public places.
The Chinese government has established cloud computing service development pilots in a number of cities. Beijing, Shanghai, Shenzhen, Hangzhou, and Wuxi were named as the five pilot sites for the development work. In a speech in June 2010, Chinese President Hu Jintao described the rapid development of cloud computing as 'a powerful tool'.
Lenovo's dominance faces a challenge from the growing popularity of tablets and smartphones. This was reflected by estimates from various analysts that in Q211 US consumer electronics leader Apple's Greater China market revenues, including Hong Kong and Taiwan, exceeded those of Lenovo for the first time. Meanwhile, PC vendor Acer appeared to have made a significant breakthrough in the Chinese market as a result of its 2010 tie-up with Chinese PC vendor Founder.
Asian vendors such as Lenovo could receive a boost as a result of US PC leader HP's recently announced plans to sell all or part of its PC division. Following the path of IBM seven years ago, HP apparently plans to reduce its exposure to the increasingly competitive PC business, to focus more on higher-value services. Lenovo was the purchaser of IBM's PC division, and, while it is not thought likely to be interested in HP's Chinese business, its operations in markets such as the US could be more attractive to it.
The cloud computing opportunity is also a growing focus for hardware vendors. In May 2011, enterprise software leader SAP signed a deal with leading telecoms company China Telecom. Under the terms of the agreement, China Telecom will sell SAP's on-demand BusinessByDesign cloud solution for midsize companies. SAP hopes that the deal will provide it access to a Chinese market opportunity of more than 1mn midsize companies.
China's computer hardware sales are projected at US$69bn in 2011 and are forecast to reach around US$111bn in 2015. PC shipments are expected to be more than 70mn in 2011, with double-digit year-onyear growth. The rollout of 3G mobile services by China's mobile telecoms network operators will stimulate netbook sales, while government subsidy programmes will boost demand in the underpenetrated rural areas.
BMI forecasts a computer hardware CAGR for the 2011-2015 period of around 12%, with small and medium-sized enterprises (SMEs), smaller towns, and rural areas driving growth, along with replacement of desktops with notebooks. Vendors face the challenges of geography and channel underdevelopment in China's enormous rural hinterland, where villages are often widely dispersed and far from the nearest large town. Vendors such as Lenovo and HP have been aggressively expanding their sales networks outside China's largest cities.
BMI projects the Chinese software market will grow at a CAGR of 15% over the 2011-2015 period. The total value of the Chinese software market is forecast to reach US$13.1bn in 2011, up from US$11.1bn the previous year.
As a rule, Chinese enterprises tend not to pay enough attention to software. However, there is a growing trend for companies to seek greater efficiency by using IT to improve productivity and lower costs, including labour costs. The hosted application model may already account for 20-25% of China's software revenues.
IT Services IT services have been the fastest growing segment of the IT market in recent years and are projected to achieve a sector CAGR of 17% between 2011 and 2015. Spending is projected to grow as banks, telecoms operators, and manufacturers invest to meet the challenges posed by growing demand for their services.
One potential demand driver will be organisations looking for help in using efficiencies from cloud computing. In the telecoms sector, the launch of 3G services and associated network rollouts will generate spending. SHOW LESS READ MORE >
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