Continued from here...

IT: IT is now increasingly considered an important vehicle to improve Chinese enterprises' competitive edge, the IT market is still enjoying a stable and fast growth. But, currently, IT spending accounts for only less than 2% of the country's GDP. The present China IT market is a very much hardware-driven market. Services value has not been widely recognized and accepted. But this also differs by industries and different enterprise types.

The top tier of enterprises in China - their IT investment structure is very similar to companies in the developed economies. But, of course, for the rest of the majority, it's obviously still at a very basic level. From an industry point of view, Consumer, Finance and Telecom are currently the largest markets for IT spending.Looking forward, we expect to see faster growth in Government, Manufacturing and Education markets.As we mentioned, China is not equally developed. But when we look at IT adoption level, the gap is even much larger than the GDP number.But with the country's westward
expansion, we expect to see the steady rise of IT demand from western China in the next three years.

Telecom: Like the Telecom industry in most other countries, the growth of China's Telecom industry is slowing down, from previous 18% CAGR between 1998 and 2004, to around 8% in the next few years.There is not much room for the further growth of fixed line user base: the penetration rate is already 65%, and it is now challenged by mobile services. The ARPU (average revenue per user) of fixed line is also declining due to the shift to mobile, as well as the popularity of IP phones.Data services will be the major driving force to the market, especially wireless data applications.The market value is likely to reach three and half billion US$ in 2005.

Prashanth RaiTag(s):China, IT Services