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 Back to 2005 Press Releases
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Gartner Says China's Path to Global ICT Success Requires Careful Navigation |
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| China striving to distinguish itself across all information and communication technology sectors |
Beijing, 1 September 2005 — The success of China's efforts to become a 'superpower' in the global information and communications technology (ICT) industry by 2010 depends, to a considerable extent, on the level of government involvement in the economy and the ability of local companies to innovate, said Jamie Popkin, group vice president and research fellow from research and advisory firm Gartner.
The ICT industry is typically broken into five broad sectors: hardware, software, services, telecommunications and semiconductors and many countries are striving to distinguish themselves in one, two or three areas. However, few countries can excel in all sectors.
"Arguably, only the US has successfully developed in each of these five sectors, but China is striving to equal that accomplishment," said Mr. Popkin. "China's growth in the global ICT industry is being fuelled by ready access to capital via massive inflows of direct foreign investment, access to the public capital markets in Hong Kong, and by strong government involvement through state-owned enterprises, government agency programs and policies."
While there are many factors that will influence the development of the Chinese ICT landscape over the next five years, there are two that will have the greatest effect. First is the level of government involvement in the economy and second is China's ability to become an ICT innovator.
Based on these two factors, Gartner has developed several possible scenarios for China's ICT industry landscape in 2010. Mr. Popkin highlights six parameters in particular to provide a balanced set of characteristics: Domestic ICT industry, ICT Export Industry, Foreign Direct Investment (FDI), Social Impact, Intellectual Property (IP) Protection, and ICT Standards. By leveraging the insight provided by these scenarios, ICT companies based inside and outside China can examine possible outcomes and tailor their business plans to reflect conditions if scenario elements become reality.
Gartner's "Global ICT Superpower" scenario assumes a high degree of government involvement and strong ICT innovation. It is characterised by balanced development of the domestic ICT industry in all sectors and export strength in IT outsourcing, application development and hardware. Under this scenario FDI continues to be a source of start-up capital, while ICT is enthusiastically embraced at all levels of society and, out of self-interest, the industry enforces IP protection. China also leads in defining new global standards and protocols.
In the second scenario, "Economic Stall - ICT Exports Limited", government involvement is still strong but the level of innovation is low. China's domestic ICT industry is characterised by proprietary technology, vendor protection and user lock-in, while exports are limited to non-strategic applications and services. FDI continues but at a lower level, the digital divide widens and piracy remains a major issue. In this scenario China shuns global standards and protocols.
The "Economic Powerhouse - Limited Government" scenario entails a more hands-off approach by government and a domestic ICT industry where innovative companies do well and the less capable organisations become cash starved. Exports have pockets of strength but the vision of a complete ICT industry does not come to fruition. The stock market and internally generated cash are the main sources of investment and there is an active entrepreneurial culture. The digital divide persists along the current economic dimension and piracy continues but, out of self-interest, the ICT industry takes action. China participates in new global standards and protocols.
"Obviously the ICT industry in India would like to see China become a global ICT superpower and there are certain things they can focus on to make this more likely," said Mr. Popkin. "Vendors need to move their products and services up the 'right' value chain and develop 'go-to-market' strategies for the US, Europe and Japan. They should be careful, however, to balance revenue between the domestic and international markets. They also need to ensure they have access to capital and marketing resources in order to sustain their operations while developing structured IP generation and protection programmes at home."
Gartner believes the Chinese Government will have to adjust its policies over time, focusing on facilitation and assistance in ICT export programmes and clearing bureaucratic hurdles to ICT investment. Government itself should invest in ICT, business education and training at all levels while continuing to strengthen and enforce IP laws. Encouraging mergers and acquisitions will help develop economies of scale to support global brands. Gartner also advocates striking a balance between domestic interests and market realities when it comes to promoting Chinese ICT standards.
End-users of ICT in China also have a role to play in the success of China's ICT industry. "The automation of process is unique to every culture and China's business culture can do much to inform its ICT industry," said Mr. Popkin. "Ensuring ICT investment is aligned with business goals, tracking emerging standards and technologies, exploiting technology-driven opportunities and developing trustworthy network and securities systems are all ways in which business ICT users can positively influence the ICT industry's development."
Press Contact:
For more information or to speak to the spokesperson of this report, please contact Bite Communications on Tel: +44 (0) 208 834 3508 or email: gartner@bitepr.com.
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About Gartner:
Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,900 associates, including more than 1,200 research analysts and consultants, in more than 75 countries worldwide. For more information,
visit www.gartner.com.
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