Asia Times: China to pour $120bn into IT over next five years


	September 28, 2001	atimes.com

Media/Information Technology

China to pour $120bn into IT over next five years

JINAN, China - China's investment in the information technology industry will top one trillion yuan (US$120.96 billion) over the next five years, says Vice Minister of Information Industry Lu Xinkui.

The investment will ensure that the size of the country's IT sector will double between 2000 and 2005, and that its added value will account for seven percent of gross domestic product.

Lu made the remarks at a recent conference on the implementation of the 10th five-year plan for the industry. According to the estimations of the ministry, 500 billion yuan of investment will go into the telecommunications sector, 50 billion yuan to postal services, and 400 billion yuan to electronic information.

Lu noted that such a huge investment could not be financed just by government allocations, bank loans and enterprises' own funds. He called for the raising of more funds from domestic and international capital markets and the deregulation of the sector to allow the entrance of private and foreign investment.

China's XIC newsagency reports meanwhile that with competition between manufacturers of desktop computers intensifying and production costs dropping, the production of laptops is expected to rapidly increase in China.

Laptops are challenging traditional desktops to become the mainstream computer, though they are not expected to replace the latter completely. If the market share of laptops in China rises from present 8 percent to 50 percent as in Japan, there will be a demand for more than 3.5 million units, which will bring the total market value to 52.5 billion yuan (US$6.3 billion).

Seeing this bright prospect, many well-known domestic computer companies, including the Legend Group, Tsinghua Unisplendour Ltd, and the Beijing University Founder Group, have put laptops on the market to compete with foreign brands. At the same time, up and coming enterprises such as the Great Wall Computer Group, the Fujian Star Computer Ltd, the Qingdao Haier Group, the Langchao Qilu Software Industry Ltd, and Seven-Up are also stepping up their production of laptops.

However, laptops presently are far from popular in China, with the sales ratio of laptops to desktops only 8 percent. In the United States, Japan and Taiwan, the ratio is 20 percent, 35 percent, and 50 percent-plus respectively. One Chinese survey shows a sales volume for laptops of 87,200 sets in the first quarter in 2000, and 119,000 in the same period of 2001.

Higher prices have dampened the popularity of laptops in China, but those between the 13,000 to 18,000 yuan price range still have their own fair share of buyers. In the first quarter of 2000, trade consumers accounted for 65.4 percent of all of China's laptop buyers, while consumers in medium and small enterprises accounted for 29.5 percent and individual consumers 5.1 percent. (Asia Pulse/XIC)