Next few years prime time for China's IT surge

Year 2005 to 2009 will witness stark acceleration of China's IT market driven by 3G business which will be used by Beijing Olympics in 2008.

CCW Research, a leading consultation and research institution for IT industry, foresees a 15.2 percent surge for IT investment following a growth of 13.7 percent in 2003. The market will value nearly 331 billion yuan by then.

56.8 percent of the total investment on IT has been made by enterprises which are digitalizing their operation. In 2005, small and medium sized enterprises (SMEs) will have their business information-oriented at a speed of 21.5 percent, faster than their larger peer which will push their digitalization process forward at 16.7 percent.

SMEs, along with foreign-funded and private companies, have become the most dynamic force in the informationalization surge in the industry.

But the biggest market is created by government departments whose IT input accounts for 20 percent of China's total IT investment. They are expected to be so generous on IT spending from 2003 till 2008 to integrate their IT facilities with their responsibilities that their IT bill will inflate 15.2 percent annually. The peak, 19.2 percent, will be seen in 2006 when the 11th Five-Year Program is launched and Beijing is approaching the finishing line of the construction frenzy for 2008 Olympics. A network will link various departments by 2008.

Local governments show special enthusiasm on IT application. 84.7 percent of government spending on IT came from local fiscal revenue and the figure will expand to 85.6 percent in 2005. In this regard, the Yangtze River Delta and the Pearl River Delta stand out. Now even counties with relatively more developed economy show increasing willingness to put their hand in their pocket for e-government project.

A spree of government procurement for software will emerge in 2005. Orders for information security products and operation systems will jump 38 percent and 28 percent respectively.

The latest data from the Ministry of Information Industry evidenced the rosy prospect depicted by CCW Research. In 2004 profits of the country's electronic information sector makes more aggressive progress than sales for the first time.

A Ministry spokesman unveiled that profits of the industry went up 48.4 percent this year while sales scaled up 36.6 percent. He added that exports of electronic information products registered a remarkable rise of 47.1 percent.

He attributed this to the grow-up of large businesses with core competitiveness and the technical innovation in the sector.

The software sector managed a year-on-year increase of 21.5 percent for the first 10 months of the year. Software service and system integration are the two biggest cash cows which generated nearly half of the sales revenue.

E-entertainment is playing a significant role in China's IT consumption market which is expanding by 20.5 percent. A new frenzy of consumption on broadband network, digital consumer products and digital TV is around the corner.

However, foreign funded enterprises dominant the market. They contributed 76.1 percent profits and 77.3 percent sales. They secured and even further consolidated their leadership in the industry. They enjoyed a comfortable head start of nearly 30 percentage points over their domestic competitors.

Chinese players are catching up. Two Chinese digital TV standards, DMB-T and ADTB-T developed by Tsinghua University and Shanghai Transportation University, have already been in trial commercial operation in eight cities and provinces in China, including Shanghai. Although the national standard is not available yet, the Chinese standards have proved to be more cost efficient and perform better than Europe's DVB-T standard which is applied in 9 cities and provinces in China.

Recently the Ministry of Information Industry recognized five technical breakthroughs. They are the Starlight chip by Vimicro, Lenovo's Superserver 6800, Ipv6 routers by Tsinghua University and Tsinghua Unisplendour, MSR and EOS by Wuhan Research Institute of Posts and Telecommunications, e-testing diagnosis system for electrical equipment by Chongqing University and Highing company.

By People's Daily Online