Domestic Production ¹⁷

Overview

Total trade (exports + imports) of computer products from mainland China, Jan-July 2001 (Source: Mainland China Customs)

Mainland China's IT industry will keep growing in 2002, but at a lower rate than in 2001. The information appliance sector is expected to experience the most growth, while Bluetooth technology will be used intensively. Suppliers say the export leaders will be LCD monitors, Personal Digital Assistants (PDAs), hard drives, CD-ROM drives, DVD-ROM drives and inkjet printers.

Computer Production

Mainland China churned out computer products worth $23.9 billion in 2001, up 24 percent from 2000, according to the Center for China Information Development (CCID). Exports, mainly to Hong Kong and the United States, amounted to nearly $20 billion. Mainland companies sold about 7.5 million PCs, up 20 percent from 2000; 1.03 million scanners, up 23 percent; six million PDAs, up 17.9 percent; and 10 million monitors, an increase of 25 percent. Notebook PCs and PC servers registered large gains in 2000. However, 2001 saw very little change in desktop PC performance, and as a result, sales were slow.

LCD VS. CRT

Sales of CRT monitors totaled 10 million units in 2001, up 25 percent from 2000. As 17-inch flat monitors grew more popular and prices plunged, LCDs started winning more orders. Now, LCDs look ready to really start replacing CRTs. Increased production has lowered the price and expanded the market for LCD monitors.

Suzhou, Shenzhen, Dongguan and Xiamen are home to top LCD monitor exporters Suzhou Acer Peripherals, Shenzhen Great Wall Computer Co. Ltd, Dongguan EMC and Xiamen Overseas Electronics Co. Ltd (XOCECO). Great Wall's $88.9-million base in Shenzhen produces 3.5 million LCDs annually.

Functional PC servers

PC server production totaled 150,000 units in 2001, up 20 percent from 2000. Of the total, 48 school, government, research and other functional applications. Small and reasonably priced, they come with the prescribed software.

Mobile Phone and PDA

PDAs providing mobile phone functions will experience massive growth in 2002, in addition to greater PDA, phone convergence, many makers will turn to producing PDA accessories such as keyboards, connectors and CF cards.

Inkjets dominate printer production

Mainland China produced four million printers in 2001, up 24 percent from 2000, according to CCID. Inkjet printers under $120 shared 60 percent of the total.

Software

To date, China's software market has been encumbered by government regulations, devastated by piracy, and extremely fragmented. In addition, software has been overshadowed by an emphasis on hardware, which has accounted for nearly 90% of China's $11 billion in IT spending in 2000. Even government offices and state-owned enterprises, the principal purchasers of software, have historically resorted to pirated versions.

Major domestic players in production

Most of the country's exports have been generated by foreign firms, with local PC companies concentrating on China's domestic market. But the local firms are growing fast and Chinese government policies are in place to boost their capacity to become major players in world markets. These homegrown Chinese companies -- Legend, Great Wall and Founder -- are now "strong enough to compete on an even footing in their home market and some may also be ready to compete in other markets as well, potentially presenting a new challenge to today's global PC leaders," say Kraemer and Dedrick. In 2002, Legend pulled in USD2.5 billion in revenue. It has expanded its business to Hong Kong, Europe, and the U.S., and is able to move into the top 10 of PC manufacturers worldwide with a 2 percent market share, rising from 13th place at the end of year 2001, according to Gartner.