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China - IT Spending in 2010 to Hit US$ 216.7 Billion
Jun 04, 2010

The Chinese IT spending is anticipated to reach US$ 216.7 Billion in 2010, representing significant growth opportunities for technology and service providers.

According to Gartner, IT spending by enterprises and consumers in China is projected to reach the figure of US$ 216.7 Billion in 2010, exhibiting good opportunities for technology and service providers. This represents an increase of 5.9% from US$ 205 Billion in 2009, as reported by Webwire.

The telecommunication industry will have the biggest share (US$ 158.2 Billion) of total IT spending in 2010, followed by hardware (US$ 43 Billion). Spending on IT services and software are projected to stay at US$ 9.4 Billion and US$ 6.2 Billion respectively. Nevertheless, both the sectors are likely to grow at faster pace than hardware and telecommunication in the next three years.

Although the economic slowdown took the whole world under its grip, China sustained its economic growth at 8.7% in 2009 along with an annual IT spending rise of 7.5%. The Chinese government positively responded to the economic downturn by giving stimulus packages worth US$ 583.9 Billion in the latter part of 2008. The government aimed the stimulus package at infrastructure and public facilities and organizations.

As per the Gartner estimates, out of this stimulus funding, US$ 40 Billion will have an impact on the Chinese IT industry during 2009-2013. The highest level of spending will occur in 2010 because the policy measures and plans were formulated and implemented in 2009. IT spending accounted for 6.1% of GDP in 2009.

The government has made the development of IT industry its preference for infusing growth and decided to enhance its economic and social fields. The fixed capital investment requirement is quite easier to obtain than other forms of financing.

Gartner states that the Chinese IT spending is primarily accredited to large vertical instead of consumer IT spending, with slow moving towards the consumer market. In the year 2010, the largest industries in terms of total external IT spending are financial, government and manufacturing. Nevertheless, the fastest growing industries are healthcare, communications and utilities (considering their compound annual growth rate of their external IT spending).

According to a Research Analyst at RNCOS, “Although the IT spending has risen, some emerging technologies like virtualization, software-as-a-service, cloud computing, green IT and unified communications are still low at the priority charts of Chinese companies. IT vendors should help their partners to develop skills around these technologies.”

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