Asia Shows Exceptional IT Growth in 1999

SINGAPORE (04/19/2000) - Asia's economic downturn of 1997 and 1998 has become a distant memory for the IT industry which showed exceptional growth in 1999, according to Dennis Philbin, managing director International Data Corp. (IDC) Japan and Asia-Pacific.

Total IT spending in 1999 in the Asia-Pacific (excluding Japan) region grew 25.4 percent over the 1998 figure to US$51.8 billion, with all countries posting over 20 percent growth except Australia, Hong Kong, Singapore and Vietnam, according to IDC figures.

Speaking at the IDC Directions Asia conference here, Philbin said that enormous opportunities existed for vendors looking to tap a resurgent Asian market, and that Asian companies were well-positioned to win a good share of the electronic commerce market.

"We're beginning to feel the new economy here," he said. "We are at a new stage in the Internet, IT and e-commerce markets. There has been an amazing change in the last year."

Vendors need to realize that as the IT market here matures, it is less accurate than ever to regard Asia-Pacific as a single market, according to Philbin.

"Vendor organizations in this region in future won't look anything like they do today," Philbin said.

China dominates Asian IT spending with a unique combination of size and rapid growth. Its IT spending will rise by an annual 24 percent from around $11 billion now to $33 billion in 2004, IDC estimated.

Australia, the largest IT market now at US$14 billion, will show much lower growth to reach US$22 billion in 2004. Other mature low-growth markets include Taiwan, Hong Kong, Malaysia and Singapore.

Korea, already the third-largest IT market in Asia, grew 65 percent in 1999 as the country rebounded from its severe recession, a growth rate second only to Indonesia, where IT spending rose around 130 percent over a disastrously low 1998 figure.

Apart from the three major IT markets of China, Australia and Korea, India is emerging as a force as sales will grow over 30 percent in each of the next 5 years to see the market there match Korea's by 2004.

The number of Internet users in Asia-Pacific is on track to reach 100 million by 2003 from its present figure of 22 million, when China alone will have over 16 million users. India's Internet population will also surge dramatically to reach nearly 6 million by 2003, behind only China and Australia, IDC said.

Electronic commerce will be largely business-to-business (B2B) oriented, and many Asian trading companies are well-positioned to take advantage of the e-commerce boom, according to Philbin.

"The real opportunities, the real spending and the real profits will be in B2B e-commerce," he said. "Asian companies are very used to trading and exporting, and the challenge is to get them online so they can grab some space in e-commerce while it's available."

A major challenge for Asian companies in the Internet era is to remember the core values of their businesses, according to Philbin.

"A business depends on the value it delivers to its customers, not on Nasdaq," he said. "The customer focus is easy to lose in a growing market, moving from customer to customer, without satisfying the original customer."

IDC is owned by International Data Group Inc., the parent company of IDG News Service.

IDC Asia-Pacific, in Singapore, can be contacted at +65-335-0711 or online at http://www.idc.com/.

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