IT and telecom revenue to reach $600b by 2020

The annual turnover of China's information technology and telecommunication industries is set to hit $602.3 billion (447 billion euros) by 2020 thanks to the positive economic outlook and growing domestic demand, industry consultancy IDC says.

Individuals and families in the country will spend 6 trillion yuan ($978.91 billion; 733 billion euros) on IT services and products from 2013 to 2020, making that group the biggest spender, IDC says.

Traditional service sectors, including banking, telecoms, education and medical, are poised to spend 3 trillion yuan to beef up their IT infrastructure during the same period.

"China's ongoing economic reform will boost the development of the IT sector," says Kitty Fok, head of IDC China.

"Because the nation is actively seeking growth driven by new technologies and industry upgrades, software services will play an increasingly important role in China's economic growth," says Fok.

Fan Gang, director of the National Economic Research Institute, estimates that average GDP growth over the next decade will stand at about 8 percent, a "normal and reasonable" speed for healthy growth.

"China is to further encourage the development of private sectors over the following years," Fan says, adding that innovation and emerging technologies could help them compete with state-owned enterprises.

The three big telecom carriers in China - all state-owned - are set to face tougher competition after a government think tank said the nation may open the industry to private capital and encourage more companies to provide value-added telecom services.

Players in the IT industry should focus on building a bigger market and try to lure more customers from less developed regions, where the mobile Internet penetration rate remains low, analysts say.

China had 464 million mobile Internet users by the end of June, according to data from the China Internet Network Information Center. Most of the users live in urban areas.

IT companies are also expected to see their earnings increase as China is heading to become the world's biggest IT spender. Chinese people will spend more on consumer electronics, mobile applications and Internet-based services as families' disposable incomes continue to increase, says Wu Lianfeng, associate vice-president of IDC China.

The nation's annual GDP is on track to hit $18 trillion by 2020, accounting for 17 percent of the global total, according to an IDC estimate.

"Big data, social networking, cloud computing and mobility will be the areas that enjoy the most robust growth until 2020, the final year of China's 13th Five-Year Plan (2016-20)," Wu says. Companies in software engineering, telecommunications and online shopping industries will have to add these features to gain competitiveness, he says.

By the end of 2013, the country will ship out 288.5 million smart-connected devices such as smartphones and tablets, Wu says. The United States, the second-biggest market, will produce about 265 million devices.

China is the world's biggest smartphone market. Its shipments represented 40 percent of the global total in the third quarter, according to research firm Canalys.

Chinese netizens showed their remarkable purchasing power during last week's online shopping spree when e-commerce giant Alibaba Group Holding Ltd reported sales of more than 35 billion yuan over the 24-hour period for Nov 11.

The nation is already one of the biggest app shoppers in Apple Inc's iOS and Google Inc's Android stores.

gaoyuan@chinadaily.com.cn

(China Daily Africa Weekly 11/22/2013 page20)