China is on the verge of overtaking Australia as Asia/Pacific's (excluding Japan) largest IT market. In 1999, China's IT market was more than $US11 billion ($19.3 billion) and accounted for 21 per cent of the region's IT revenues. IDC expects it will grow to over $US14 billion this year.
"As an already-integrated part of the world economy, China currently lags behind the rest of the world in terms of IT adoption," said Ken Xie, general manager of IDC China. "However, both Chinese government policy makers and end users increasingly view IT adoption as a critical factor of China's membership in the international community. With this backing, China will experience strong growth in late 2000 and will maintain this strong growth throughout the next five years."
IDC expects China's IT market will more than triple by 2004, when it will account for almost one-third of Asia/Pacific's IT market.
Currently, hardware dominates the Chinese IT market, accounting for almost 88 per cent of China's IT spending in 1999. However, IDC does expect a change in the country's IT spending patterns. "As the computer installed base keeps growing, demand for software and services will grow," Xie said. By 2004, software and services will account for 15.8 per cent and 9.6 per cent of China's IT market, up from 6.9 per cent and 5.3 per cent, respectively.
Finance represents China's largest IT industry. In 1999, it accounted for almost 31 per cent of IT revenues with $US3.4 billion. Telecom was second with revenues of more than $US 2.1 billion and a market share of just under 20 per cent. "The chief reasons for the fast growth of the finance sector is because of its mission-critical business nature and because of the fast booming of China's economy over the last 20 years," Xie said. "As for the telecomms sector, the consumer market is obviously one of the major contributing factors."
IDC expects these two industries will continue to be China's largest consumers of IT products through 2004. However, their market shares will likely decrease as other industries bulk up their IT consumption.
China's Internet market will also experience substantial growth through 2004. By 2004, IDC forecasts there will be more than 33 million Internet users in the country. The Internet economy could grow even faster than the number of users. IDC expects it will increase at a compound annual growth rate more than 170 per cent and surpass $US114 billion in 2004.
IDC recently published China IT Market Overview, 1999-2004, which examines China's IT market by region, industry, and product category. Detailed forecasts and analysis are provided for data communications equipment, packaged software, IT services, and Internet markets. The report looks at key trends affecting the market and discusses market drivers and inhibitors.