Computers sales lifted by small businesses
By Liu Baijia (China Daily)
Updated: 2006-02-17 08:31

Chinese consumers will purchase 30 million computer units each year by 2008, a leading domestic market consultancy said yesterday. However competition will get more heated, leading to falling prices and profit margins.

CCID Consulting, a research house affiliated with the Ministry of Information Industry, said in its annual information technology industry forum that shipments of computers rose by 19 per cent year-on-year in 2005 to almost 20 million units, while sales stood at 121 billion yuan (US$15 billion), growing 8 per cent.

"The unexpected strong demand from small and medium enterprises and consumers drove computer consumption above our expectations," said Huang Yong, president of CCID Consulting.

The statistics from the global consulting firm Gartner were more encouraging.

Gartner said yesterday that the shipments of desktop and notebook computers grew 29 per cent to 19.26 million units in 2005, with an unexpectedly good fourth quarter.

The brisk growth in the Chinese mainland, Hong Kong and India stimulated the whole Asian market, with the exception of Japan, to its highest growth rate since 2000. Shipments grew 26 per cent year-on-year to 41.7 million units.

However, the report also said intense competition led to aggressive price cuts and eroded profits.

In the desktop computer market in China, shipments grew by 16 per cent in 2005, but sales only rose by nearly 5 per cent.

For a market like China, which used to enjoy a growth rate of more than 20 per cent a year, the situation in 2005 was poor, so Huang urged them to seek new opportunities from an industry characterized by price wars.

"We must pursue excellence," said Huang.

He added that besides prices, brand and efficiency in business operations are keys to victory.

CCID predicts the average annual growth rate of shipments from 2006 to 2010 will be 14.5 per cent, while sales will grow at 11 per cent.

The sales in the Chinese computer market this year will exceed 130 billion yuan (US$16 billion), and 220 billion yuan (US$27 billion) in 2010.

David Miller, president of Dell China, said there are still many opportunities in the business.

On one hand, the small and medium business market, which is already a major driving force for the rising demand, is still at the beginning of the value chain and their demand for IT products is yet to be met.

On the other hand, the IT systems in large enterprise and governments, two other big buyers in the market, are becoming more and more complicated, which will also provide long-term stimuli, Miller said.

(China Daily 02/17/2006 page10)