As China enters a period of “second reform”, it will have a profound effect on the world’s economy, and the IT industry will have to change quickly to keep up.
The Chinese government has revealed that by 2020, decisive achievements shall be made on reform in major fields and key links, and reform tasks shall be completed to form a systematically complete, scientific, standard and operation-effective institutional system.
This was published in the Decision of the CPC Central Committee on Several Important Issues of Comprehensively Deepening Reform. The publication of the Decision is the inauguration of the second deep reform in China.
The Decision gives direction and framework of the second reform in six fields: economy, politics, culture, society, ecology and national defence.
“The Decision lays a favourable market foundation for China’s economic growth in the future, and with the help of the second reform, China’s ICT market will embrace boundless business opportunities in 2020,” says Kitty Fok, MD of IDC China.
For the first time, the decision recognises that the “market plays a decisive role in resource allocation”, and starting SOE (state owned enterprises) reform and emphasising inviolability of private property, will effectively arouse the enthusiasm of private enterprises.
Measures including enlarging FTA (Free Trade Area) pilots, expanding inland and border opening, and relaxing investment access will effectively allow foreign investment in China full play.
Policies improving urbanisation development systems and mechanisms, and relaxing the one-child policy will effectively support the healthy development of urbanisation.
IDC predicts that China’s annual GDP growth rate will still reach over 7,2% during 2013-2020, and in 2020, China’s GDP will be up to USD 18-trillion, accounting for 17% of the global.
In view of that, IDC predicts that by 2020, the size of China’s IT and telecom service markets will both exceed USD 300-billion, with a total amount of USD 602,3-billion and an average annual growth rate of 7,7% during 2013-2020, and the accumulative ICT market size will amount to USD 3,8-trillion during 2013-2020.
Along with deepening of reform and increase of economic aggregate and ICT total market, by 2020, ICT vendors will face changes in economic environment, technical trends, ecosystem and user demands. They would be learning how to cope with the four changes to realise transformation and revolution, an issue all ICT vendors must expect to be confronted with.
By 2020, IDC expects the consumption in China to account for 60% of GDP, the service industry to account for 65% of GDP, the urbanisation rate to reach 60% and the strategic emerging industries to account for 15%. Therefore, all fields will embrace huge business opportunities.
IDC forecasts that accumulative IT market size of individuals and families will reach 6-trillion Yuan during 2013-2020; the accumulative IT market size of general service industries (including finance, telecom, healthcare, education, and service) will decrease to 3-trillion Yuan, the accumulative IT market size of Smart Cities will reach 1-trillion, and the accumulative IT market size of the strategic emerging industries will be up to 200-billion Yuan.
IDC predicts that by 2020, more than half IT asset of over 50% Chinese companies will be in the third-party software defined data centre, over 60% of the enterprise storage capacity will be transferred to the cloud service providers, over 30% of Chinese top 500 companies will apply the artificial intelligence-based question-answering system to operation of call centres and retail stores businesses and the pricing mechanism based on value and transaction will be extensively applied to big data service.
By 2020, nearly 100% Chinese Internet users will be mobile Internet users with the total number of 840-million and the popularity rate of over 60%,50% of cars delivered to China will be terminals of giant Internet and Internet of Things.
More than 25% of the major companies will use the “Sense-Response” business model to replace the “Make-Sell” model, and 50% of the Chinese top 500 Companies will adopt social business to re-define the market and customer service function.
IDC forecasts that the 3rd Platform will be the mainstream of ICT market in 2020, accounting for 44,1% of the enterprise IT market, which rises from 22,6% in 2013. The accumulative market size of the 3rd Platform during 2013-2020 will be up to USD 195,4-billion, with an average annual growth rate of 22%, far higher than the average growth rate of ICT market.
The future ecosystem will be an era of “user is king and platform is queen”. All vendors will provide services for users around the platform, whether to build a platform by themselves or become an indispensable part of the platform.
Meanwhile, they have to be competent with personalised sales to new large-scale users. Internet companies, telecom operators, innovative industry solutions providers, exclusive industry equipment or service providers, and industry users will all be new business partners of traditional IT vendors.
According to IDC, by 2020, 120-150 Chinese companies (95 companies in 2013) will rank among the Fortune 500 List, accounting for 1/3 of the total, and by 2020, China’s outbound tourists will be 300-million, the per capita GDP of China’s first-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen, will reach USD 30,000.
Those born in the 90s will become the backbone of employment and consumption, and the aged (more than 65 years of age) will be 20% in 2020. All these changes require ICT vendors to continuously innovate to prepare for global service of enterprise and individual users, China’s consumption upgrading, and consuming behaviours of the generation after 90s and the aging trend.
IDC forecasts that the accumulative online shopping sales will reach 28-trillion Yuan, and the cumulative on-line game market size will exceed 1-trillion Yuan.
“In order to adapt to the four changes, it is critical for ICT vendors to make full sense of and explore the connotation and influence of the second reform; learn about the general trend in 2020; make overall arrangements and plans in advance in the aspects of market entry time, creation of core competence and development of new co-operation strategies; and use the Internet open-source and openness, equality and democracy to re-define the target industries and consumers to gain continuous success in the ICT 3rd Platform era,” says Lianfeng Wu, Associate VP, Vertical Industry Research & Consulting, IDC China.
