Doubling of China's GDP to Fuel Demand for Consumer Goods; Boon for ICT Sector

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Note -- this news article is more than a year old.

The recently concluded 18th China Communist Party Congress which saw outgoing President Hu Jintao deliver a report on China's economy and a roadmap for the next decade will jump start key industries including the information and communications technology (ICT) sector where a projected doubling of the 2010 GDP and per capita income for urban and rural residents is expected to create strong demand for consumer goods.

Over the next 10 years the annual growth rate of China's GDP and per capita income is expected to be higher than 7.2%. The increasing per capita income will not only boost the expansion of traditional FMCG and retail industry, but also drive the growth of the durable consumer goods industry, as well as home digital content and services.

The market for consumer PCs, tablet PCs, smartphones, Internet services, and digital content will keep growing in a fast and steady way over the long term.

China is expected to see a boom in the industrial software and ICT solutions sector. Fueling the growth further will be the country's urbanization rate, which is projected to exceed 60% in the next 10 years, leading to the fast growth of urban IT infrastructure and services.

The increased demand for IT support for agricultural modernization will significantly boost the steady development of broadband infrastructure construction, comprehensive information service stations, grassroots-level e-governance solutions, Internet of things technology, and personal terminal devices (PC, tablet, smartphone) in rural areas.

In terms of accelerating the economic growth model, the Report said: "We should deepen the reform of economic institution, implement innovation-driven development strategy and enhance the level of China's open economy."

This indicates the government will consistently promote the SOE reform, encourage strategic emerging industries, further attract foreign investment, and make China's economy more open. There will be greater support for the expansion of the ICT market shared by the SOE, strategic emerging industries, and multinational companies.

Social Management Innovation Will Benefit Government and Smart City

The key thrusts in the report point towards the development of a smart city. Through data collection from widely deployed end-points on the Internet of things, cloud data storage, and big data mining, the smart city system will better support the innovative social administration. In February 2012, 154 Chinese cities in 28 provinces proposed the idea of building a smart city with a total investment of 1.1 trillion RMB - 41 of these cities have incorporated this idea into their twelfth 5- year plans or government work reports.

Building a Powerful Cultural Country Will Benefit the Digital Contents

The Twelfth Five-Year Plan of China's Cultural Industry proposes the target that China's cultural industry output value will grow from 400 billion RMB in 2010 to 900 billion RMB by 2015. IDC's research shows that the actual sales revenue was 32.36 billion RMB, an increase of 30.4% over 2009. This figure is estimated to reach 78.93 billion RMB with compound growth rate of 20%. Television, movie, and anime industry will enjoy a steady development too. All of these are the driving force for the expansion of ICT market for digital content industry.

"To seize the opportunities for ICT market brought by the 18th Party Congress, IT companies should carefully study and fully understand the Report and China's future macro-economic policies in order to develop arrangements and plans for market entry timing, core capacity building, and new competition-and-cooperation strategies development. For the already competitive IT companies, it is better to enter the market as soon as possible. In terms of competitive capacity building, the IT companies should put great emphasis on the Third Platform, based on cloud computing, mobile technology, social networking, and big data. As for competition-and-cooperation strategy, comprehensive considerations must be given to the significant value of the eco-system of the whole ICT industry chain," concludes Lianfeng Wu, Associate Vice President of IDC China.

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