China Information Technology Report Q2 2016
BMI View: Data for 2015 and the forecast for 2016 were revised down in the Q216 update but our corescenario continues to be for an expanding Chinese IT market and local industry. Despite heighteneduncertainty we expect a stronger growth trend in 2016 as the hardware market gains momentum andenvisage a CAGR of 8.1% for 2016-2020 as a whole. A hard landing is a downside risk, but under our corescenario we envisage broad based income growth, enterprise modernisation, and government support forthe IT industry, and particularly emerging technologies such as cloud computing and the internet of thingswill drive market expansion over the medium term. The overall outlook is positive but opportunities will notbe distributed evenly and challenges for foreign vendors operating in China as it pursues its nationalinterest will remain a factor.
Latest Updates And Industry Developments
Computer Hardware Sales: CNY592.1bn in 2016 to CNY735.5bn in 2020, a CAGR of +5.2% in localcurrency terms. Market maturity means growth will be slower than the decade to 2013, but risingincomes has upside for vendors to focus on higher price and margin PCs in the retail market.
Software Sales: CNY100.8bn in 2016 to CNY164.5bn in 2020, CAGR of +11.9%. Rising labour costsand broader dynamic of enterprise modernisation will underpin increased software spending, while clouddelivery models offering lower costs and more flexibility will deepen the market.
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