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China's IT sector back on fast track
2004-12-21
China Business Weekly
China's information technology (IT) sector, which was affected by a slowdown in recent years, is back on the fast track, indicates a Beijing-based research house.
IT spending in China is expected to grow 13.7 per cent year-on-year this year to reach 286.52 billion yuan (US$34.52 billion), indicates a report released last week by CCW Research.
That would compare with the 12 per cent growth posted last year.
China's IT sector will grow even faster -- at 15.2 per cent -- next year, the report predicts.
IT investment by businesses will account for 56.8 per cent of the total IT spending in China.
IT spending by small and medium-sized enterprises (SMEs) will grow 21.5 per cent next year.
In contrast, IT spending by large companies will grow 16.7 per cent, year-on-year, next year.
"SMEs, foreign-invested companies and privately held companies are the most active in terms of adopting information technologies," CCW said.
The research firm predicted the consumer IT market will grow 20.5 per cent next year.
"Next year, the country will embrace another IT market boom, driven by broadband network applications, digital home consumption, digital TV and related applications," it said.
IT spending by government agencies will grow at a CAGR (compound average growth rate) of 15.2 per cent in the coming five years.
It will grow 18.3 per cent this year to reach 40.8 billion yuan (US$4.92 billion).
Regional governments are ramping up IT investment.
Their IT spending will grow 17.6 per cent next year, while the central government's IT spending will grow 9.9 per cent.
IT spending by regional governments will account for 85.6 per cent of the total government IT investment next year.
The Chinese Government's increasing awareness of intellectual property rights (IPRs) is boosting China's software business.
The government's procurement of information security software and operating systems will grow 38 per cent and 28 per cent, respectively, next year, CCW predicts.
Chinese telecoms firms will overtake government agencies to become the country's largest IT spender in 2006-07.
IT spending by telcoms will grow 14.7 per cent next year, compared with 5.8 per cent growth last year.
In 2006-07, the growth rate will soar to 36.8 per cent and then slip to 31.9 per cent.
"The future roll-out of 3G (third-generation) mobile services will boost telecoms firms' IT spending," CCW said.
IT spending in China's education sector is projected to grow 10.6 per cent this year.
In 2005-08, it will maintain flat growth, at an annual average rate of 7 per cent.
IT expenditure in China's finance sector seems to be sluggish.
IT spending in the sector will grow 5 per cent, year-on-year, to reach 24.89 billion yuan (US$3 billion) this year.
In the coming four years, the CAGR of IT spending in the finance sector will stand at 8.4 per cent.
Chinese manufacturers will start a new wave of IT investment next year.
Their IT spending will grow 15 per cent annually between 2005 to 2008.
Due to shortages of electricity, oil and coal, Chinese energy firms are placing a premium on IT spending to increase production efficiency, cut costs and enhance competitiveness, CCW said.
IT spending by energy firms will grow about 17 per cent annually between 2004 and 2008.
Electricity firms will overtake oil firms to become the largest IT investor in the energy sector, CCW predicted.
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