The FINANCIAL — The second stop of IDC China’s 2015 Directions forum in Beijing continued with the theme of “Accelerating Innovation and Digital Transformation”.
Innovation and transformation are critical to the performance of both ICT vendors and industry users. On one hand, with economic growth lacking momentum, the real economy reeling, traditional industries undergoing disruption and reconstruction, IT market growth remaining in the single-digit range, and “second platform” leaders are continuing to struggle. On the other hand, China’s economic structure is upgrading, reforms are picking up speed, emerging industries are rising, third-platform market is maintaining high growth, and new vendors are emerging on the scene, according to IDC.
According to Kitty Fok, Managing Director, IDC China, “China expects to be on the forefront of technological innovation in so many fields. Those vendors daring to meet the rapidly evolving demands of the Chinese market will have huge opportunities. Focusing on six macro trends and six key technologies to capture digital transformation opportunities should be part of the development strategy of every ICT vendor and industry user.”
Industries in the middle of New Digital Transformation
The 3rd platform, which includes Cloud, Big Data/Analytics, Social Business and Mobility, has been widely applied in various industries. These same industries have undergone reconstruction in the digital transformation. According to IDC’s research, 64% of enterprises worldwide are exploring and implementing digital transformation. Customer experience, flexible and efficient business processes and innovative business models have become the core of the new digital transformation strategy.
6 macro trends will be the cornerstone of Digital Transformation opportunities
The year 2015 is a key year which will see China comprehensively deepen reforms, the inaugural year of comprehensive implementation of the rule of law, as well as the ending year of the 12th Five-year Plan. The goals, tasks and policies formulated by the government in 2015 will have a huge impact on the Chinese economy and serve as a good barometer for China’s IT market. According to IDC’s analysis, six macro trends will be the cornerstone of digital transformation opportunities.
Seven categories of infrastructure projects: This is China’s massive RMB 10 trillion government investment plan which aims to maintain China’s stable economic growth, benefit people’s livelihood and strengthen the foundation of China’s economic transformation. The seven categories of infrastructure investments include: 1) grain and water conservancy; 2) transportation; 3) ecology and environmental protection; 4) healthcare and old-age services; 5) major networks of information, electricity, oil and gas; 6) clean energy; and 7) oil, gas and mineral resources. IDC predicts that the seven infrastructure investment packages will contribute over RMB 100 billion of IT investments.
The Belt and Road: This is China’s initiative to transfer the country’s excess capacity to other countries, support the globalization of Chinese enterprises, and drive the internationalization of the RMB. With a total investment of over RMB 30 trillion, it will directly contribute RMB 300 billion of IT investments.
Made in China 2025: This government initiative aims to transform and upgrade China’s manufacturing industry and improve its competitiveness, presenting huge business opportunities for robotics, Internet of Things (IoT), ICT infrastructure, and industry solutions.
Internet+: The goal is to digitalize traditional industries and support entrepreneurship and innovation by everyone, presenting huge business opportunities in fields including ecommerce, enterprise mobility, big data, IoT and SNS.
Smart City: With the goals to grow industries, benefit people’s livelihood and maintain stable economic growth, Smart City represents huge business opportunities in fields including cloud computing, big data, mobile, social, and IoT.
Security and Controllability: The goal is to achieve information security and controllability at the national level. Foreign IT vendors will face huge challenges. The only choice available to them to stay relevant in this market is to transfer technology to and have in-depth cooperation with Chinese IT vendors.
6 technologies based on the 3rd platform will accelerate business innovation
IDC forecasts that by 2020 the 3rd platform will become the mainstream of the ICT market, with its share in the business IT market increasing from 49.2% in 2015 to 71.3% in 2020. Growth of the 3rd platform will be nearly five times that of the average growth of the ICT market. Six technologies based on the 3rd platform will accelerate global business innovation:
Robotics: enabling super-automatic flexible production and provision of services, and speeding up manufacturing transformation and upgrade
Natural interface: making products or systems easier to use and more intelligent and comprehensively upgrading the user experience
3D printing: achieving large-scale customization of manufacturing, meeting personalized needs of consumers, and driving manufacturing innovation
IoT technology: pushing the limits of sensing and intelligent scaling applications to improve user experience and empower business model innovations
Cognitive systems: applying sophisticated artificial intelligence applications in various industries to improve user experience and business procedures; and
Next-generation security technology: protecting all digital businesses ICT security must advance to meet customer demands
China’s IT market still offers huge opportunities
IDC forecasts that China’s GDP will have a compound annual growth rate (CAGR) of approximately 6.5% from 2015 to 2020 and reach USD 17.5 trillion in 2020, accounting for 17% of the global GDP, near the level of the GDP of Western Europe, and ranking second in the world. China’s ICT market will continue to grow steadily. IDC forecasts that China’s IT market and telecommunications service market will both reach USD 300 billion in 2020, representing a CAGR of 7.0% from 2013 to 2020, with the accumulative value of the ICT market from 2013 to 2020 reaching USD 3.8 trillion.
According to Wu Lianfeng, Associate Vice President, IDC China, “For business, the key to making the most of the “6 plus 6” means reshaping the corporate culture toward innovation and making concrete plans in terms of market entry timing, core strength building, and formulation of new strategies of competition and cooperation. This will allow businesses to capture the real opportunities in the age of digital transformation.”
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