Boston, MA -- (SBWIRE) -- 09/30/2013 -- IT spending growth in China is expected to outperform on a regional and global basis, with a forecast for CAGR of 9.2% from 2013-2017. A supportive economic and policy environment, low penetration of key products and services, and the meta-trend of urbanisation and infrastructure investments by the government will continue to drive demand. However, China's IT market is not without its challenges as the pool of first-time buyers diminishes and vendors struggle in the face of high levels of piracy, cyber security issues and price-sensitive consumers. The outlook is still positive, but as China develops, so its IT market evolves and vendors offering mobile PCs and services firms with strong cloud computing product portfolios are expected to perform best in China.
Headline Expenditure Projections
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Computer Hardware Sales: CNY500bn in 2012 to CNY533.1bn in 2013, +6.7% in local currency terms. Forecast revised downwards in the Q413 update as the shift from desktops and notebooks to cheaper tablets
accelerates. Software Sales: CNY99.4bn in 2012 to CNY114.0bn in 2013, +14.7% in local currency terms. Modernisation of enterprises will be the key driver of growth, particularly implementation of enterprise software among SMEs as they scale up.
IT Services Sales: CNY165.3bn in 2012 to CNY185.5bn in 2013, +12.2% in local currency terms. Outsourcing market is expanding rapidly, while the SME cloud market is a particularly strong source of growth.
Risk/Reward Ratings: China's score was 58.8 out of 100. China stayed in fifth in the Asia region in our latest RRR table, ahead of Malaysia, India, and Philippines; but still behind more developed Asian markets such as Singapore, Australia and Malaysia.
Key Trends And Developments
China's IT market continues to be hardware centric, a feature not expected to change in the short-tomedium term with household PC penetration still relatively low. Therefore, BMI expects China to cement its position as the world's largest PC market by shipments - after overtaking the US in 2012. However, there is some uncertainty around the hardware market as sales are shifting towards tablets. We expect Android based tablets from local manufacturers such as Lenovo and Huawei will continue to make inroads with price sensitive consumers and ultimately eclipse Apple's iPad market share. This will, however, have a detrimental impact on growth of market value as consumers shift away from more expensive desktops and notebooks.
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