China's enterprise IT market set for stable growth in 2014

The mainland is closing the gap on the US and Japan in technology spending, a report shows

PUBLISHED : Saturday, 04 January, 2014, 1:54am
UPDATED : Saturday, 04 January, 2014, 1:54am

With the global economy predicted to expand faster this year, China is expected to further narrow the gap with the industry leaders, the United States and Japan, in the US$2 trillion global information technology market.

Total government and business spending in IT on the mainland is estimated to reach US$124.5 billion, up 10.5 per cent from last year, according to a new industry forecast published yesterday by Forrester Research.

That would be enough to keep China as the world's third-largest technology market. The mainland would also be the third-fastest-growing market among emerging economies, behind Brazil and Mexico.

The report, which did not include corporate telecommunications services and consumer spending, projected the US market would reach US$877 billion this year, followed by Japan at US$211.4 billion.

Andrew Bartels, a vice-president at Forrester and lead author of the report, said: "An improved economic outlook for 2014 and 2015 will translate into better growth in the global market for business and government purchases of IT goods and services than [what] occurred in 2013."

He forecast global IT spending by governments and businesses would reach US$2.22 trillion, an increase of 5.5 per cent from last year, with software purchases gaining the biggest share at US$568 billion.

Spending on telecommunications equipment - including network routers, television and radio broadcasting gear and smartphones bought by companies for use by their employees - would have the smallest share at US$373 billion, the report said.

Forrester estimated the overall technology market in Asia-Pacific would "stay on a steady growth path", advancing 4.5 per cent from 3.1 per cent last year.

While Japan still has a technology market that is about 1.5 times that of China, Forrester said the mainland "continues to narrow the gap".

Demand for personal computers, for example, has remained steady in China, compared with a decrease in other markets around the world.

Lenovo, the world's largest supplier of personal computers, has managed to strengthen its business on the mainland, with a 34 per cent share of desktop and laptop sales in the financial quarter to September.

In November, Lenovo chairman and chief executive Yang Yuanqing said: "Benefiting from corporate refresh and China market improvement, the PC market is recovering."

German firm SAP, the world's largest supplier of business software, has predicted that technology spending by the mainland's state-owned enterprises would pick up after a considerable slowdown in the past several quarters.

Other multinational companies are also continuing to invest in key IT products sourced from China. US computer giant Dell, for example, is spending more than US$25 billion a year on the mainland in terms of manufacturing and sourcing of IT components and related products.

As a group, China, India, Brazil, Russia, Turkey, South Africa and Mexico would account for 13 per cent of the global technology market this year, Forrester said.