• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

CCID Consulting: Review and Forecast on China's Electronic Information Industry

Posted on: Monday, 29 December 2008, 07:00 CST

BEIJING, Dec. 29 /PRNewswire-Asia/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its article on review and forecast of China's electronic information industry.

Affected by the financial crisis, China's electronic information industry in 2008 went through a period of slow growth and in-depth structure adjustment. Looking forward to 2009, CCID predicts overcapacity, decline in external demand, cost drop and sluggish domestic demands for the industry. In the medium to long-term, the development of China's electronic information industry will depend on the breakthroughs of independent and innovative technical impetus and domestic demands.

Overview of the whole industrial economic operation in 2008

Growth rate of production slows down. The production of mobile phones in China in first ten months of 2008 reached 479.517 million sets, up 6.7% year-on-year, and the growth rata is down 18.9% year-on-year; the production of microcomputers reached 119.298 million sets, up 17.1% year-on-year, and the growth rate down 19.5% year-on-year; the production of IC reached 36.23 billion sets, up 6.9% year-on-year, and the growth rate is down 9.5% year-on-year. The market of traditional electronic products shrink further -- the output of fax machines is down 10.6% year-on-year; the output of VCRs is down 21.6% year-on-year.

The growth rate is lower than national industrial average growth rate. In 2008H1, the growth rate of electronic manufacturing industry experienced a slight rebound, and reached its summit in June. But in 2008Q3, the industry growth rate declined rapidly, that by the end of Oct., the main business income of manufacturing with over 5 million Yuan scale was up 15.7% year-on-year, but the growth rate was down 5% over the growth rate in 2008H1, and that the growth rate was down 10.7% over the national industrial average growth rate.

Growth rate of export and import slows down, which is lower than the growth rate of national foreign trade. In 2008, China's electronic information products' import and export maintain a stable and rapid growth, but in 2008H2, the growth rate slowed down. In the first ten months of 2008, the total import and export volume of electronic information products reached $754.84 billion, up 17% year-on-year, the growth rate was down 6.9% year-on-year, and down 7.4% over the growth rate of national commodities import and export. The export of electronic information industry reached $440.14 billion, up 20.5% year-on-year, the growth rate was down 6% year-on-year, and down 1.4% over the growth rate of national export trade.

In-depth industry structure adjustment. Software and components industry maintain rapid development. As for growth rate, in the first ten months of 2008, the growth rate of software industry is 31%, up 13.4% over the whole industrial average growth rate; the growth rate of electronic devices is 29.2%, which is up 11.6% over the whole industrial average growth rate; the growth rate of electronic components is 22.1%, up 4.5% over the whole industrial average growth rate. As for proportion, the income of software industry accounts for 13.6% of the industry in the first ten months, up 1.3% year-on- year; the income of electronic components industry accounts for 28.6% of the total industry, up1.7% year-on-year. High-end products enjoy rapid development. The growth rate of LCD TV and PDP TV are respectively 51.6% and 142.0%. The share of flat panel TVs accounts for 29.8% of the total market; the growth rate of notebook computer is 28.7%, and the shares of notebook computer accounts for 73% of microcomputer market; and LCD display accounts for 94% of display market.

Growth rate of Midwest area overtook that of the East in 2008, as the Midwest area went through an industry transfer. In the first top ten months of 2008, the income of electronic information manufacturing in east China reached 3793.48 billion Yuan, up 14.6% year-on-year; the income of western region reached 104.74 billion Yuan, up 37.9% year-on-year. The growth rate in western region is up 23.3% over the growth rate is eastern region. The income of central region reached 157.33 billion Yuan, up 29.5% year-on-year, whose growth rate is up 14.9% over eastern region.

Effects of the Financial crisis surfaced in 2008Q3

Figures show that the industry is getting weaker as early as 2007: both industrial sales revenue and the growth rate of export declined. The export of China's electronic information products in 2007 was up 26.2% year-on-year, but the growth rate was down 9.4% compared to 2006. The fall of export growth rate becomes the main factor of the downslide of the industrial growth. The trend began as early as 2007H2, with external demands of China's electronic information products started to plummet as the economies in major European and American countries weakened.

In 2008H1, enterprises suffered increasing cost pressures. The continuous increase in prices of international bulk commodities led to a global inflation as many European and American developed countries' inflation reached record levels in recent years. Imported inflation pressure as well as internal factors in China's economy led to increasing PPI, which led inflation to reach new heights in ten years in August. Rising PPI resulted in increasing cost pressures for the electronic information industry. On the other hand, average retailing prices of electronic products continued to fall. Rising costs and decreasing product price mean there is smaller room for profit, which is reflected in the net and gross profit rate of Lenovo, ZTE, BOE, and other IT enterprises.

On the export side, in 2008H1, export fluctuated but did not record an obvious decline, which in 2008H2 showed a much sharper downturn trend. The growth rate in June was 23.6%; but the growth rate in August, Sept. and Oct. were respectively 22.5%, 21.7% and 20.5%. In 2008H2, the gradual recession in European and American economies led to the gradual decline in China's electronic information products, which seriously the industrial development due to a large reliance on exports, as showed in the 2007 statistics that the whole electronic information industrial export dependency index was about 60%.

The influence is obvious in 2008Q3 and 2008Q4. The growth rate of electronic equipment manufacturing's income in the first nine months of 2008 decreased by 3.1% year-on-year (the manufacturing scale is over 5 million Yuan). The growth rate in 2008Q3 decreased rapidly, which shows that the global crisis has greatly impacted the China's electronic information industry.

Industrial forecast in 2009

With European, American and Japanese economies still in recession, external demand will remain weak. In 2008Q3, Germany and Japan confirmed that their economies have plunged into recession; in Dec., America confirmed that its economy have entered into recession. Meanwhile, leading economic indicators in European, American and Japanese all point to a downturn, and analysts have forecasted that the global economy need two years to get out of the recession.

As for domestic demand, China is launching a series of measures to boost internal demand, but their effects are yet to be seen, especially that these measures focus more on the financial sector and infrastructure and that the actual results will first be reflected in the investment field before benefiting consumption.

On the other hand, manufacturers will be further relieved from cost pressures as commodity prices continue to fall, and prices of petroleum, mineral products and nonferrous metals have decreased by over 50%. As for China's market, PPI has also decreased rapidly, from 110.1 in August to 106.6 in Oct., and in Nov., the PPI has decreased to 102. It is forecasted that PPI will present downslide trend in the next few months.

CCID therefore predicts that overcapacity, shrinking external demand, falling costs and sluggish domestic demands will characterize the industry in 2009. China's electronic information industry developed rapidly from 2003 to 2007. During these years, China's electronic information industry built great production capacity through export and investment, leading to its high dependence to export. With a weak global economy, the fall in external demand will lead to production surpluses, which manufacturers will respond by cutting prices to boost domestic consumption.

Industry development strategy

Fluctuations in the export mean that China will need to turn to emerging economies for new markets, amid recessions in the American, German and Japanese markets. The new external demands may come from India, Russia and Brazil.

China's electronic manufacturing has cost advantage worldwide, but its operation efficiency is much behind that of Japan and China Taiwan. China's electronic information industry should eliminate its backward capacity and improve manufacturing efficiency.

Generally speaking, China's electronic information industry takes on an extensive growth, driving by export and investment. Lower cost has been a major competition method in the development of China's electronic information industry. However, this development mode has been somewhat spent in these two years. Long term development of China's industry should turn to technology innovation and opening of domestic demand.

Compared with traditional industry, electronic information industry owns a shorter lifecycle of technologies, products, and industry upgrading. For example, the replacement of flat panel display to CRT leads to upgrading of the whole display industry and creates huge market opportunities. Grasping the strategic chance of analog technologies evolution to digital technologies, South Korea achieves breakthrough in flat panel display, storage, communication, and other fields.

About CCID Consulting

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China.

Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting's customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.

For more information, please contact: Cynthia Liu Coordinating Manager CCID Consulting Co., Ltd. Tel: +86-10-8855-9080 Email: liuyan@ccidconsulting.com

SOURCE CCID Consulting Co., Ltd.

Source: PR Newswire

More News in this Category