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Banking Industry will lead China IT growth
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Wednesday, February 26, 2003
Everyone has noticed China is a growth market, with Western companies lining up to take advantage of the potential market there. Gartner Dataquest today put some numbers to that potential, releasing its forecast for China’s IT services market.
Dataquest expects China to be the second fastest growing country for IT services, although it will lag behind mature IT service economies like the United States, United Kingdom, Japan and Australia. The Chinese IT services marketplace is still relatively immature, which can be challenging for IT services vendors, Dataquest said.
Despite that, Dataquest forecasts the Chinese IT services market to reach $4.9 billion in 2003, a 18.1 percent increase from 2002 revenue of $4.2 billion. A compound annual growth rate of 19.6 percent will see IT services revenue in China reach $8.9 billion in 2006.
“Many multi-nationals find themselves in the unenviable position of educating both the local users and the local service providers on the value of IT services,” said Jacqueline Heng, senior forecasting analyst for Gartner Dataquest, in a statement. “However, all is not bleak. It is a long task ahead for certain industries while others, such as the telecom services industry have found pay-off from their investments. The other sector to watch is the financial services market.”
Chinese banks are preparing for free-market competition, and this will force them to will deliver solid IT growth in the financial services market.
“The low level of IT usage in the banks, and the full fledged entry of MNC banks post WTO, the need to shore up credit-card infrastructure before the Beijing Olympics and the growing local insurance markets will be strong drivers,” said Kingshuk Hazra, industry analyst for Gartner Dataquest's IT vertical industries group, in a statement.
There are various challenges that the Chinese market will face though.
“Many factors can inhibit growth in the industry, such as the country's bank debts, the economic difference between the coastal regions and the rest of the country, the lack of a sizable middle-class segment, and slow de-centralization of the rural governing system,” Heng said.
By: DocMemory
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