IBM upbeat on mainland sales growth

John Kohut

IBM is forecasting 40 to 50 per cent annual growth in its China sales over the next few years, with the key areas including transport and banking systems and personal computers, according to Robert Savage, managing director of IBM China/Hongkong.

China accounted for much less than one per cent of IBM's more than US$60 billion revenues last year, and it would still take some years before mainland sales reached the one per cent mark, Mr Savage said.

''But if you look at the rate of growth of the [Chinese] economy and compare it to other economies, from that point of view it's quite important to us,'' he said.

Last year, IBM's mainland revenues grew by 70 per cent, the best performance for the corporation in all of Asia.

This year, mainland revenue would probably rise by 40 or 50 per cent, Mr Savage said, adding that that level of growth was sustainable for the next few years.

For IBM, as well as its competitors, the business possibilities in China are enormous. ''Most of the things we would take for granted as computerised in the rest of the world are requirements in China,'' Mr Savage said.

In outlining some of IBM's priorities in China, Mr Savage said the company would try to boost its sales of personal computers.

''This is the hottest item,'' Mr Savage said. ''PCs are 35 per cent of the total industry [in China], so you can't afford not to be a player in that market . . . So our plans clearly are to sell more personal computers.'' Currently, IBM claims only about two per cent of the personal computer market on the mainland.

Other priorities included getting ''the best applications available around the world, and getting them into Chinese'', and, in the case of large systems involving major state projects, to adapt technology to the needs of the Chinese clients, Mr Savage said.

China was clearly interested in upgrading its computer systems for transport, such as airlines and shipping, and for banking.

Among other projects, IBM is working with the Chinese on an Advanced Banking Terminal System, a workstation to make deposits and collect cash.

The system will have about 50 per cent local content.

It would take about 10 years before the system was fully operating in branches across China, Mr Savage said.

IBM, with its China headquarters in Beijing and offices in Guangzhou and Shanghai, has about 300 people dedicated to the China market.

By the end of the year the number could rise to as many as 400. This compares with a staff of around 120 two years ago.

Reports in the United States say that IBM will shed 50,000 or more workers this year.

But in China, the difficulty was finding enough qualified local workers and training them quickly enough to keep up with the market, said Mr Savage.

Over the next 12 months, IBM plans to open up several new offices to step up service to the 55 per cent of its China market outside Beijing, Shanghai and Guangzhou.

Dalian, Wuhan, Xiamen, Kunming, Chengdu and Shenyang are among the cities under consideration for new IBM offices, although plans have not been finalised.

IBM has two joint ventures in China, in Tianjin and Shenzhen. Mr Savage said further joint ventures were under consideration, but he declined to elaborate.