SMBs in China to Invest US$28B on IT in 2007

SINGAPORE–(BUSINESS WIRE)–Small and medium businesses (SMBs, or companies with up to 999 employees) in China will invest more than US$28 billion on IT solutions in 2007, buoyed by the country’s surging economic growth and strong demand from end-users. The IT spending in 2007, excluding telecommunications, will be about 19% over last year, according to the latest study by Access Markets International (AMI) Partners, Inc.
Medium businesses (100-999 employees) in China will account for over 70% of this spend, with the bulk of investments coming from the manufacturing vertical segment. “China-based MBs see retail outlets as their channel of choice for buying a wide range of IT products, ranging from PCs, servers to printers and software,” says James Cheng, Singapore-based Analyst at AMI-Partners. “As MBs mature in their understanding of IT infrastructure, system/network integrators and value-added resellers (VARs) will increase in importance in the channel space.”
AMI’s studies reveal that most MBs make the bulk of their IT hardware and software purchases either through national computer retail chain stores or a local computer retail store. “This is largely because a big part of their total IT spending still goes towards basic computing hardware,” Mr. Cheng says. “With over 60% of MBs preferring to buy PCs, servers, printers, networking products and even software from their local computer retail store, vendors cannot afford to ignore the retail channel as a partner.”
Retail partners’ influence over MB purchase decisions is likely to decrease over time as these businesses move higher up in the IT adoption cycle. “MBs in China invested a huge US$17 billion in 2006 on IT alone,” Mr. Cheng says. “Spending on basic computing infrastructure continues to dominate the bulk of IT spending. However, we are likely to see this decrease over time as more MBs focus on leveraging their existing infrastructure to maximize business value.”
Spending on IT services is expected to increase to 20% of total IT spending in the MB space in 2007. MBs’ investment priorities in the next 12 months will center on maximizing their past IT spending by integrating their hardware and software to enhance productivity, as well as keep up with rapid business expansion.
With little evidence of a slowdown in China’s economic growth, one can expect the country’s MBs to continue growing in size and network. Being direct beneficiaries of China’s strong growth, these MBs will find themselves having to invest more in high-end IT infrastructure and services to horn up their competitive edge. These businesses will turn to reliable system/network integrators and VARs to help them integrate their disparate hardware and software applications for optimum business operations. IT vendors will do well to establish a strong network of channel partners now and be ready to capture this huge market.
About the Study
AMI’s 2006-2007 China Medium Business Market Overview and Comprehensive Market Opportunity Assessment study highlights these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software,healthcare outsourcing, applications and business process solutions. Based on AMI’s annual surveys of MBs across China, the study track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to MB market requirements.
For more information about this study, AMI-Partners, or our global SMB research, please 212-944-5100, e-mail,health care outsourcing, or visit the AMI Web site at
About Access Markets International (AMI) Partners, Inc.
AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose,hospitality solution, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.
AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.