IDC: 2015 China Commercial IT Device Market Top 10 Predictions – Opportunities and Challenges
03 Feb 2015
Beijing, January 23, 2015 – The year of 2014 witnessed the beginning of China’s great reform with the adjustment of China’s macro economy toward the “new normal”. China’s economy shifted gear from the previous double-digit growth to a more realistic and milder growth as the economic structure was radically adjusted including economic rebalance and policy regulation. Amidst this macro situation, IDC makes the following 10 predictions on the key trends of China commercial IT device market in 2015:
1. The demand for enterprise IT devices will grow steadily
Following the radical adjustment of China’s economic structure, commercial IT device market in China will enter a steady development stage. All industries should adapt to the new environment by finding ways to improve efficiency and create more value from information technology. Meanwhile, usage of mobile devices must also be considered as business requirements adjust to a mobile workforce.
2. Government will make procurements in a more regulated and transparent way
As China’s anti-corruption activities intensify, government procurement will be more transparent, and product properties and prices will be disclosed to the public in detail. Also, as smart cities develop across China, more public and shared information will be made available on a variety of public service platforms, thus imposing higher demands on the information construction and network security of governments. Therefore, governments will put continuous efforts on improving network security in 2015, bringing more opportunities for domestic manufacturers.
3. Large-screen smartphones will have more opportunities in commercial market
According to “Quarterly Report on China’s Mobile Phone Market (3Q 2014)” published by IDC, the shipment of smartphones in China is expected to reach 420 million units in 2014, up 19.9% over the same period last year. Such growth is primarily driven by the consumer market. As the consumer market is getting saturated, large-screen smartphone will be widely adopted in commercial market. This will be largely driven by the mobile and social technologies, increasingly lowered price, and the advantages brought by improved usability. Usage of large-screen smartphones will continue to be expanded in mobile law-enforcement in 2015. Also, massive adoption will occur in some emerging service industries including store management, and warehousing and logistics management.
4. Transformation of traditional banking will speed up by investing in IT
The demands of China’s overall banking industry for IT equipment developed steadily in 2014, largely due to the macroeconomic environment and demand online banking. In contrast, the sector of traditional banking suffered from lowered profitability. In 2015, China’s financial reform and “reinforced regulation” will together drive the deleveraging in the economy. Along with capital market reform and interest rate liberalization, the traditional banking industry will invest more in IT equipment and enhance its interconnection with online financing by applying more IT technologies. Only in this way can the banking industry move forward.
5. Informatization of the healthcare industry generate demands for more IT equipment
Development of the healthcare industry will continue in 2015. Healthcare infrastructure construction will be further spread in tier-5 and 6 cities to improve the coverage of medical informatization. Since the IT infrastructure in tier-1-4 cities has improved, more efforts will be placed in the new healthcare modes such as Internet-based healthcare, mobile healthcare, family healthcare and health management for the massive Chinese population. This will intensify the linkage of these new medical modes with existing medical services. IDC predicts that the informatization of the healthcare industry will enter a stage of overall development and generates demands for more IT equipment in 2015.
6. There is a huge potential of IT equipment demand in Central and Western China
Limited by geographical location and traffic condition, Central and Western China have been economically behind the coastal Southeastern China. Since implementation of the 12th Five-Year Plan, the State doubled its efforts to develop these more remote regions, for the purpose of rapid adjustment of regional structure and shift of consumption, investment and export focus. Along with further deepening of China’s policy on boosting domestic demand in 2015, new potential of domestic demand will be unleashed. Central and western regions have a huge potential of investment demand in public infrastructure and public consumer infrastructure. Moreover, the transformation and upgrading of strategic emerging industries and traditional industries call for heavy investments, thus generating a huge potential of IT equipment demand.
7. More business services will benefit from 3D printing
In its early development stages, 3D printing was too costly to be practical beyond large industrial projects. However, with advances in technology, 3D printing costs will be lowered continuously in the incoming three years, thereby boosting the growth of the low-cost equipment market. Many more enterprises – especially in business services, bioengineering and consumer applications — will benefit most from such growth. Meanwhile, owing to the continuous improvement in design accuracy, prototype and workflow, 3D printing will develop into a reliable and profitable mode of production.
8. The wearable device market will become more segmented, with more opportunities for industrial capacity expansion
2014 witnessed a booming development of smart wearable products, largely for the consumer markets. Wearable devices ranging from Google Glass, entertainment control system, child custody, healthcare, smart home and smart clothing have become a hot spot of capital investment and market competition. As all the relevant technologies and conditions are becoming more mature, people will find additional uses across their work and home environment. According to IDC, in 2015, the wearable device market will be further segmented. From the perspective of industrial segment, investment opportunities will emerge in such wearable device-based segments as financial payments, smart home communication and mobile healthcare; and from the perspective of industry, the fields of environmental protection and Industry 4.0 will also move forward.
9. Distribution drives IT purchasing in the warehousing & logistics industry
In 2014, a variety of E-business operators made inroads into the Chinese population. Along with the establishment of highly developed logistics and Internet networks, online shopping has become the favorite lifestyle of citizens in high-tier metropolis. However, a large group of potential users are yet to be explored in lower-tier cities, villages and towns. Due to such unfavorable factors as lack of E-business enterprises, overflowing with counterfeit articles and regulation loopholes, the development of E-business industry in lower-tier cities will be impeded to some extent. However, with the development of infrastructure construction and the changes in consumption concept of citizens in low-tier cities, it will become imperative for E-business operators to go down to low-tier cities, villages and towns. Both distribution network expansion and warehouse management will contribute to a huge demand of IT equipment, thus creating a greater development potential in 2015.
10. Small and medium enterprises (SMEs) will continue IT purchasing in a deregulated business environment
To address SMEs challenges such as high operating cost and heavy tax burden, the State Council launched a series of tax incentives for small and micro businesses in September 2014. These tax incentives will continue in force in 2015, with more policy benefits offered to SMEs. Therefore, SMEs will operate in a more favorable environment featured by relieved tax burden and improved financing conditions. In addition, with environmental changes at home and abroad and maturing of various conditions, the construction of SME service systems is gradually coming to a fruitful end. All the above measures will result in SMEs putting more capital in procurement of IT equipment.
According to Cherry Wang, Analyst of IDC China, “The further implementation of reform measures carried forward from 2014 will make 2015 not only a critical transition year of China’s economic restructuring but also a year of opportunity for IT equipment manufacturers and enterprises using information technology for competitive advantage.”
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