Chinese CRM, IT Spending to Top $20 Billion for the Year

Medium businesses in China, defined as companies with 100 to 999 employees, are set to invest an upwards of $21 billion to "reinforce their IT infrastructure and products" this year, almost twenty percent more than last year's spending, with the bulk of the spending being on IT services such as CRM, computing and the Internet.

This finding comes from the latest study by New York-based Access Markets International Partners, Inc.: "A sizeable number of medium businesses in China have crossed the first two waves of IT adoption, and are now in the third wave, which focuses on the extension of the enterprise," says Balaji Sreedhar, Singapore-based Research Analyst at AMI-Partners.

The first wave of IT adoption was building the basic IT infrastructure -- personal computers, basic accounting and HR tools. The second wave was connecting within the enterprise, LANs and servers. And the third wave, according to AMI officials, involves "connecting outside the enterprise, such as with suppliers, resellers, channel partners, and customers."

MBs in China are increasingly adopting enterprise software such as ERP and CRM, the study records, finding that "nearly 25 percent of China MBs have adopted ERP and close to 20 percent have CRM software in place." The survey indicates that "further adoption of these two solutions is extremely likely in the next 12 months," Mr. Sreedhar says.

AMI finds that "very few MBs use internal funds to buy IT products," they typically opt for either "financing or leasing options."

The top three priorities for MBs in China this year are deploying high-speed broadband Internet access, networking all hardware in the main office and enhancing IT security and privacy, the study finds.

On the other hand, the top three factors hindering the growth of MBs in China are an uncertain economic environment, especially the appreciating Reminibi against the dollar which, in turn, is affecting exports; the lack of cash flow, and the ever-increasing local and global competition.

Last summer China's electronics and IT industry maintained rapid growth in the first five months of 2006, with its profits growing by 34 per cent to hit $5.6 billion. This is 8.5 per cent higher than the average of China's whole industrial sector.

Asia In Focus reported at the time that the industry "realized sales revenue growth of 31.8 per cent in the period, 11.2 per cent higher than that for the year earlier period and 6 per cent higher than the 25.8 per cent growth for the sales of China's whole industrial sector."

It posted a sales-production ratio of 97.6 per cent in the five months, "1.3 per cent higher than in the year-earlier period, while the industry's sales inventory ratio dropped from 11 per cent a year earlier to 9.5 per cent."

David Sims is a contributing editor for TMC (News - Alert) Net.  For more articles please visit David Sims' columnist page.

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