IT industry taking off after years in doldrums
(China Daily)
Updated: 2004-02-11 01:32

The information technology (IT) market in China is shrugging off the slow growth it has experienced in the past three years and shipments of desktop computers will break the 20 million line in 2007, a leading domestic market researcher is predicting.

"After three years of low-speed development, the IT industry will be on the fast track again,'' said Huang Yong, vice-president of CCID Consulting Co Ltd, an industrial think-tank for the Ministry of Information Industry.

The analyst, speaking at the 2004 China IT Forum in Beijing yesterday, said that the Chinese IT market -- including the IT hardware market, software and IT services -- will grow at an annual average speed of 18.1 per cent in the next five years and reach 763 billion yuan (US$92.2 billion) in 2008.

The total sales for IT in 2003 was 332.6 billion yuan (US$40.17 billion) and this year is expected to see about 19 per cent year-on-year growth to about 400 billion yuan (US$48 billion), according to Huang.

Correspondingly, IT spending in China will see a rapid increase in the coming five years.

Huang predicted that total IT investment from 2004-08 will amount to 2.3 trillion yuan (US$278 billion), compared to a total of 1.4 trillion yuan (US$169 billion) in the past decade.

Computer sales, which account for about 30 per cent of the total IT market, will continue to lead the growth in the next few years, Huang believes.

The Hong Kong-listed consultant said the computer market will keep an annual average growth rate of 14.1 per cent from 2004 to 2008 and stand at 200 billion yuan (US$24 billion) in 2008.

Shipments of desktop computers will reach 20 million units in 2007, from last year's 11.41 million units.

"Chinese customers' enthusiasm in using notebook computers will be a major trend in the personal computer market in these years,'' Huang said.

Sales of notebooks are forecast to contribute 30 per cent of the total computer sales in 2008, up from last year's 18 per cent.

Digital products, which began to be popularized in China in recent years, make up the fastest growing segment of the IT market with an expected annual average growth rate of 38.3 per cent in the next five years.

Wireless personal digital assistants and digital cameras will lead the growth, with average rates of 60 per cent and 53 per cent during the 2004-08 period.

Software, which the Chinese Government has been paying a lot of attention to, is also set to achieve significant growth this year.

The market will grow by 2.5 times from last year's 39.9 billion yuan (US$4.82 billion) to almost 100 billion yuan (US$12 billion) in 2008.

As to the competitive scenario for operating system products, Huang believes that despite strong momentum and lots of efforts of the so-called open source software movement, Linux may not pose any significant challenge in market share to the dominant Microsoft Windows operating systems in the foreseeable future.

The IT service market will also break the 100 billion yuan (US$12 billion) barrier in 2006 and maintain an annual average growth of 23.6 per cent in the next five years.