China to Become Second Largest Market for PCs By 2006

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Last updated at: (Beijing Time) Tuesday, March 05, 2002

China to Become Second Largest Market for PCs By 2006 - Study

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With the shipment of personal computers (PCs) in China surpassing that of Japan, China will become the second largest market in the world after the United States by 2006, a leading IT market research organization has predicted.

"After the adjustments and consolidations in 2001 and 2002, the growth of the market will pick up speed until 2006," said Yang Tianxing, president of CCID Consulting Co Ltd which is affiliated with the Ministry of Information Industry.

US computer processor giant Intel's CEO Craig Barrett also said on Thursday that China will surpass Japan as its largest customer in this year or the next.

According to the forecasts of CCID Consulting, the shipment of desktops will see a breakthrough with 10.1 million units in 2003 and the figure will reach 17.4 million, more than double the 7.28 million last year.

The average annual growth rate for the Chinese PC market will remain at 18.8 per cent for the next five years.

Sales volume of the market is also expected to almost see a two-fold increase to 104 billion yuan (US$12.6 billion) from last year's 51.7 billion yuan (US$6.3 billion), according to the research firm.

Yang chided the pessimistic outlook of some researchers that China's PC market has entered recession.

"The difficulties many PC makers faced last year mainly resulted from too high expectations of computer sales in China after the Internet fever in 2000, so the long-term prospect will still be positive," the veteran IT expert said at the weekend.

WTO entry to spur demand

He believed China's entry into the World Trade Organization (WTO) last December and the initiation of the nation's 10th Five-Year Plan (2001-05) would be driving forces for the sustained growth of the PC market.

The start of construction for the 2008 Beijing Olympic Games will also spur demand.

For foreign computer makers, the attraction of the world's most populous market will be enhanced in future, Yang said.

"In five to 10 years, more and more international players will shift their plants to China which will become a centre of PC manufacturing and exports by then," he added.

However, there will still be hard times for almost all PC makers this year, analysts believe.

According to a recently released report on CCID Consulting on the desktop market in 2001 and 2002, the growth of shipments last year was 17.4 per cent on 2000, while the growth of sales was only 12.3 per cent.

The report, one of CCID Consulting's 67 reports on almost all areas of the information industry in China, also forecasts this year's growth rate of PC shipments over 2001 will be 16.7 per cent, lower than the rate in 2001. The growth of sales is expected to shrink further to 12.2 per cent.

Meanwhile, the average price of desktops last year dropped by 4.4 per cent on the previous year.

Changes and industry reshuffle inevitable

"The scenario for the market will see some major changes in these years and an industry reshuffle is inevitable," said Zhang Hongfen, a senior researcher on computer market with CCID Consulting.

She predicted the arena for desktop makers would be more and more concentrated into the hands of some big nationwide players.

"Future competition will be based on efficiency, so large scale firms will have an advantage," she explained.

Together with the increased ferocity of the competitions, rising frequency of mergers and acquisitions will also characterize the evolution of the market, with many existing players making an exit.

China Leads PC Sales in Asia-Pacific

Sales of personal computers in the Asia-Pacific region, excluding Japan, rose 14.4 percent in the first quarter from a year earlier to 4.7 million units, led by sales in China, according to latest data released by U.S.-based market-research firm Gartner.

Asia-Pacific personal-computer sales are traditionally slower in the first quarter, but the decline from the fourth quarter of 2000 was a slight 0.1 percent, as strong sales growth in China offset declines elsewhere in the region, Gartner said.

It said 1.9 million personal computers were sold in China in the first quarter, up 38 percent from a year earlier. Full Story

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