Boston, MA -- (SBWIRE) -- 07/23/2012 -- BMI View: China's IT spending growth is forecast at around 13% in 2012 which, due to a more negative economic outlook, is a slight slowdown compared with 2011. Despite an expected moderation in IT investment and retail spending over the next year, an expansion in consumer credit and a modernisation drive in sectors such as education, healthcare and manufacturing should keep the market in positive trend territory. The government's 12th five-year plan calls for significant modernisation of China's computing infrastructure. Meanwhile, China's strategy to develop the western areas of the country should support demand for IT products and services, even if the developed east coast economy hits a slowdown.
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Headline Expenditure Projections
Computer hardware sales: US$71.9bn in 2011 to US$79.6bn in 2012, +11% in US dollar terms. Forecast downwardly revised in US dollar terms due to macroeconomic factors, but smaller towns and rural areas will drive growth, along with replacement of desktops with notebooks.
Software sales: US$13.5bn in 2011 to US$15.8bn in 2012, +17% in US dollar terms. Forecast downwardly revised in US dollar terms due to macroeconomic factors, but the growing global ambitions of any Chinese companies, as well as the still booming domestic market, are fuelling investments in software.
IT Services sales: US$22.7bn in 2011 to US$26.3bn in 2012, +16% in US dollar terms. Forecast downwardly revised in US dollar terms due to macroeconomic factors, but spending is projected to grow as banks, telecoms operators and manufacturers invest to meet the challenges posed by growing demand for their services.
Risk/Reward Ratings: China's score was 48.6 out of 100. China remains sixth in the Asia region in our latest RRR table, ahead of India, Thailand and Vietnam but still behind more developed Asian markets such as Singapore, Australia and Malaysia. The country's relatively low Market Risk score offset the boost from its IT market size, but China should continue to ride up the rankings over time.
Key Trends & Developments
- Growth has decreased slightly, owing to government economic cooling measures and uncertainty about the global economic situation. Headline retail figures remained healthy for much of 2011, but BMI expected this growth to moderate. In early 2012, there were concerns that high consumer price inflation could hit demand for durable goods like computers.
- By the end of BMI's five-year forecast period, the rural PC and notebook market could account for as much as 35-40% of total China computer sales. The subsidy programme will continue to boost demand from the vast, under-penetrated rural areas. Lower-tier cities and towns are expected to be the fastest growing segment of the PC market in 2012, although this has placed pressure on prices.
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