Tougher Time Loomed for China's PC Market

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Last updated at: (Beijing Time) Monday, December 03, 2001

Tougher Time Loomed for China's PC Market

This year China's PC market is expected to suffer further agonies this year with stiffer domestic competition and world wide technological plunge, with sales of computers, software and information services expected to grow by 4.6 percent to 238 billion yuan (29 billion U.S. dollars).

Sale growth slows down in fiercer competition

China's PC market is expected to suffer further agonies this year with stiffer domestic competition and world wide technological plunge.

This was predicted by Tang Weisheng, director of Computer Business Information Research Co, an IT market research firm with a nationwide network to monitor computer sales.

He said that sales of computers, software and information services would only grow by 4.6 percent to 238 billion yuan (29 billion U.S. dollars) this year.The figure was the most pessimistic forecast about the 2001 market.

CCID Consulting Co., another IT market research firm close to the Ministry of Information Industry, had said previously the growth rate might be 15 percent and the International Data Corporation's forecast was even higher at about 30 percent.

The entry of many new players into the industry attracted by the 30 percent rising rate last year has led to an intensificationof competition. Rarely will any PC maker keep the same rate and many of them are suffering heavy losses in the second and third quarters, Tang said.

Shift to regional markets and professional services predicted

He also predicted that PC makers and distributors will shift more attention to regional markets, rely on professional services for profits, and adopt e-commerce technologies.

IBM has vowed to develop more than 3,000 resellers and dealers in small and medium Chinese cities in a hope that the growth salesof PCs there would exceed that in large cities.

Legend, China's leading PC maker, is set to care more about such regional markets as in counties and value-added services to customers.

PC market still has great potential

The popularity of personal computer (PC) in China is expected to increase at an annual rate of 25 to 30 percent in next five years.

China's market will keep this growth momentum for five to 10 years, Yang Yuanqing, president of Legend Group, China's largest PC manufacturer, said earlier.

The sluggish global market for PCs would not affect the Chinese market much, said Chen Chong, an official with the Ministry of Information Industry.

PCs are far from being popular in China as the popularity rate was less than 30 percent in big cities, such as Beijing, Shanghai, and Guangzhou which were believed to have the strongest purchasing power across the country. The figure for the country as a whole was no more than 10 percent.

The Chinese market has a huge potential, about 10 million medium-sized and small businesses in China are still using computers individually. Only 2 percent of the country's large and medium-sized enterprises have established their intranet.

A low-price policy adopted by Dell has increased its sales in Asia by 40 percent. Some other famous brands, such as IBM and Compaq, are also targeting China's market. Home PC producers were estimated to have an intense competition with the foreign rivals within half a year.

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