China’s IT Industry, Present and Future
China’s IT Industry, Present and Future
  • Chung Myung-je
  • 승인 2009.07.08 18:03
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IT Industry of China

China has  670 million registered cell phone users as of March 2009, according to statistical data. Cell phone users have grown monthly by 7.42 million. China's total number of telephone users now exceeds one billion, including 335 million fixed-line users. China's fast-growing population of Internet users has risen to 298 million to become the world's largest. The latest figure is a 41.9 percent increase from last year.

China is the world's most populous country with a population of about 1.3 billion, which means that one in every five people on the globe is a resident of China. Its economy is the second largest in the world after that of the United States. The country is a rapidly developing socialist market economy with unknown potential.

Over the past few years, China has achieved high economic growth rates thanks to the development of its industries such as the information technology industry, including mobile communications. Because of special events such as the Beijing Olympics and the Western Development Program, China’s IT industry expanded explosively.

Growing based on the traditional industries such as machinery, electronics, petrochemicals, automobiles and construction, China has focused on nurturing new industries such as information and communications, bioengineering, new materials, and space and aviation. Under these circumstances, China is seeing its state-of-the-art industries growing fast, while emerging as the world’s factory also in the IT sector.

In recent years, large portions of new foreign investments have concentrated on state-of-the-art industries including semiconductors. In 2000, about 30 percent of foreign direct investment was made in the IT sector alone. Moreover, an increasing number of Taiwanese firms have offshored their factories to the Chinese mainland, bringing cross-strait relations between China and Taiwan closer and creating a new economic zone that can outmaneuver other Asian economies such as South Korea. All told, China’s IT industry is growing rapidly on the strength of the fast expansion of the Chinese market and the Chinese government’s pro-IT policy.

Thanks to the Chinese people’s increased income and the increasing number of Internet users, China’s PC market has boomed over the past years, emerging as Asia’s largest market after Japan. What is noteworthy is the fact that Chinese brands such as the Big 3 brands – Lianxiang (Legend), Fangzheng (Founder) and Changcheng (Great Wall) – have long squeezed big foreign brands out. Only IBM still stays in the Top 5 Chinese PC brands. Chinese conglomerates’ remarkable performance is due not only to their price competitiveness, but to the improved quality of their products. Chinese brands account for more than 80 percent of the Chinese PC market, with these Big 3 taking up more than half of this market share. Another strength of the Chinese IT industry is a large market share - more than 40 percent - held by some 100 small and medium-sized Chinese PC assembly firms.

The Chinese IT industry is expected to grow fast, given its rapid emergence based mainly on its R&D investment, its price competitiveness and its close relations with Taiwanese firms who hold advanced technologies. Given Chinese companies’ close cooperation with Taiwanese firms, the South Korean media have coined a new term Chaiwan. A Taiwanese media outlet once quoted the South Korean media as providing "intense coverage of Chaiwan," adding that this “vividly depicted the impact cross-Strait economic cooperation is having on South Korea.” The Chosun Ilbo on July 6 wrote that a honeymoon between China and Taiwan posed a threat to their rival industries in South Korea. All this shows that the better the Chinese IT industry performs, the more alert South Korean IT firms will be and the more effort they will have to exert in order to develop new technologiesto enhance their competitiveness. After all, competition is what they will face, no matter which angle it comes from. We believe they can find a breakthrough if they focus on Green IT and technology convergence as a way of survival.


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