A huge untapped market in China is poised to open up in 2007, as the many small businesses there with no PCs will seek to purchase one this year. Small businesses (with up to 99 employees) constitute a large proportion of the overall market in China, and comprise 93% of the China business universe. Yet, 67% of small businesses (SB) in China do not own any computers, representing a potential US$345 million market opportunity for PC vendors.

According to the latest survey by New York-based Access Markets International (AMI) Partners Inc, up to 30% of these non-PC SBs in China plan to buy a PC in the next 12 months. The manufacturing sector makes up the largest share of the non-PC market with 73% of SBs not owning any PCs. About one-third of these SBs plan to buy a PC in the next 12 months.

"With desktop prices lower than those of laptops, 84% of non-PC SBs planning to buy PCs will buy desktop PCs for which they will pay an average of US$800," said Cindy Tan, Singapore-based analyst at AMI-Partners. "Comparatively the average price they are willing to pay for a laptop is US$1,150. Popular choices of desktops PC brands they intend to purchase include Lenovo, Samsung, HP and Dell."

The top three drivers of PC adoption are automation of business processes and improved efficiency, increases in employee productivity and keeping pace with competitors. SBs want to use the Internet to build stronger relationships with customers and suppliers. China has set up a special fund from the Central Government's budget to support the development of SMBs to help them boost technology adoption. This makes it easier for SMBs to cooperate with large companies and improve their overall development environment.

Price was cited as the most important factor in determining IT purchases. "SBs tend to estimate the total cost of operations before buying IT products and also factor in other costs such as IT support and maintenance services, training, software, and others," Tan said. "PC vendors need to introduce more bundled promotions and financing/leasing options targeting China SBs. The bundles should include hardware, software, installation, maintenance and support."

SBs that do not have any plans to buy PCs said they do not see the relevance of using computers in their line of business. A fax line and a phone are sufficient for them to conduct business. "Some SBs also have the perception that PCs are too complex to install and support," Tan said. "It is thus necessary to educate SBs about the advantages of computers. They need to know how technology adoption can help them gain an advantage against their competitors."