IT spend in China worth $216.7bn

Spending on IT by consumers and enterprises offers substantial opportunities for technology and service providers.

According to analyst Gartner, this represents 5.9 per cent growth from $205bn in 2009; the Chinese economy grew 8.7 per cent in 2009, with IT spending growing at 7.5 per cent year-on-year. China’s government responded to the downturn by injecting $583.9bn in stimulus measures during the latter part of 2008, specifically addressing infrastructure and public facilities and organisations.

Gartner estimated $40bn of this stimulus funding will impact the Chinese IT industry from 2009 to 2013, with the highest level of spending in 2010 as most stimulus policy measures and plans were finalised and executed during 2009. IT spending represented 6.1 per cent of Chinese GDP in 2009; this ratio will decrease slightly to 5.5 per cent during 2013 as the market matures.

Biggest area for IT spending in 2010 is expected to be telecommunications ($158.2bn), followed by computing hardware ($43bn), IT services ($9.4bn), and software ($6.2bn). IT services and software are expected to show faster growth than the hardware and telecommunications sectors between now and 2013.

The IT economy in China is driven by large verticals, rather than by consumer IT spending, said Gartner principal research analyst Uko Tian; however, it is “slowly evolving toward the consumer market”: in 2010 the largest industries (as measured by total external IT spending) are manufacturing, financial services and government, Tian reported. However, Gartner estimated that the fastest-growing industries are healthcare, communications and utilities (based on the compound annual growth rate (CAGR) of their external IT spending).

Demand from Chinese companies for emerging technologies like software-as-a-service (SaaS), virtualisation, Cloud Computing, unified communications and green IT, is low but rising. IT vendors should help their channel partners continue to build skill sets around these emerging technologies, as spending on these technologies may help drive IT spending to 2013 and beyond.

Gartner has published an extensive analysis of the IT market outlook for China to 2013. Additional information is available in the report: ‘Emerging Market Analysis: IT, China, 2010 and Beyond’.

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