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China - Country and IT Market Study (Summary)
 

China - Country and IT Market Study (Summary)

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Forecasted to be the largest economy based on GDP by 2025

Forecasted to be the largest economy based on GDP by 2025

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    China - Country and IT Market Study (Summary) China - Country and IT Market Study (Summary) Presentation Transcript

    • China - Country and IT Market (Summary) Global Market Expansion Advisory For more details and complete copy of the report, write to us at info@zinnov.com This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov Zinnov Management Consulting
    • Table of Contents Summary Macroeconomic Environment Infrastructure Overview Vertical Insights IT Market Landscape International IT majors / Indian Companies Landscape 2
    • Table of Contents More than Summary ~ 767 Mn strong Labour force ~ 215 Mn Youth ~ 51 Mn SMEs 1.1 Billion mobile subscribers Overtakes US as the largest PC market 2nd largest E-commerce market in the world 3
    • Summary - Macroeconomic Environment $ GDP 2012-16 Growth driven by Industry and Services 9.2% CAGR sector, Government initiatives 23% Debt/GDP Debt remains at low level if local ratio governments and agencies debt is not Positive Neutral taken into account 36.3 Median China’s working population expected to Age decrease in years to come 4.1 % China’s unemployment level remains at Unemployment Source: IMF, Central Statistical Organization low level compared to other emerging Negative Neutral countries 4
    • Summary - Vertical Insights (1/2) ~15.5 Mn car sales; 2012. Automobile exports valued at $12.7Bn in 2012 E-commerce industry valued at $200Bn in 2012 sales; 17.1% YoY Retail 7.2% YoY growth $3,327 Bn retail Automotive 7%GDP contribution by Automotive Manufacturing in Unorganized retail accounts for 80% of the total growth market 4,700 Twh electricity generated in 2011; 11.7% growth over Energy/ Power travel; 9.5% YoY tons. Foreign Direct Investment in Energy sector was Neutral valued at $1.6Bn in 2012 Beijing Capital International Airport was Asia’s Busiest Airport in 2012 with 81.9Mn passengers growth Low cost carriers account for only 5% of the total market $10,645Bn Loans; Non-performing loans ratio declined from 0.97% in 18.4% YoY growth Aviation Positive China has Asia’s largest Coal reserves of 114.5Bn 2010-11 680 Mn passenger Positive 2011 to 0.92% in 2012 Neutral Positive Banking Figures for 2012 unless quoted separately; YoY growth for 2011-12 5
    • Summary - Vertical Insights (2/2) $378Bn expenditure on Healthcare Strong workforce of 6.5Mn healthcare personnel $123.7Bn expenditure IT/ITeS Market driven by Hardware components. on IT/ITeS Healthcare $41.8Bn spent on healthcare infrastructure in 2012. 69Mn PC shipments in 2012 Positive Positive IT/ITeS ~$1,007 Billion invested in real estate Real-Estate Rapid urbanization driving real estate growth Positive in 2011 1.1Bn mobile subscribers in 2012; Largest Mobile Subscriber Base of 1.1Bn users in YoY addition 12.8% 2012. Mobile internet users were ~420Mn Positive Telecom 6.9Mn enrolments in tertiary education in 2012; 1%YoY growth High Adult Literacy rate of 94% 1.9% GDP expenditure on education Negative Education Figures for 2012 unless quoted separately; YoY growth for 2011-12 6
    • Summary – IT Market Landscape Total Domestic IT Market PC Installed Base Internet Users Mobile Subscribers Smartphone Users $ 122.9 Billion Over 356 Million Over 564 Million Over 1.11 Billion Over 330 Million Hardware (65%), IT Services (22%), Software (13%) 69 Million units shipped in 2012 ~420 Million mobile internet users Largest mobile subscribers in the world China accounted for 22% of total smartphone shipments 7
    • Basic Facts & Figures Communist state Shanghai: City with the highest population in China. It is a major financial center and has the busiest container port in the world Fiscal Year – Calendar Year (1st January to 31st December) English, Mandarin, Cantonese and several other local languages Chinese Yuan (sign: 元; code: CNY) Chinese religion (78%), Buddhist(9%), Others (12%) Source: Beijing: 2nd largest populated city in China. It is home to the headquarters of the most of China’s largest stateowned companies Guangzhou: Capital and largest city of Guangdong province. A key national transportation hub and trading port 8
    • Table of Contents Summary Macroeconomic Environment GDP Forecasts Financial Performance Governance scores Demographics details Infrastructure Overview Sector Overview IT Market Landscape International IT majors / Indian Companies Landscape 9
    • Table of Contents Summary Macroeconomic Environment Infrastructure Overview Sector Overview IT Market Landscape International IT majors / Indian Companies Landscape 10
    • Infrastructure Overview - Railways Largest Railway Network of 98,000 Km as of 2012 Freight Volume(Mn Tons) 2nd 3.93 3.64 8% Launched world’s longest high speed railway line from Beijing to Guangzhou spanning a length of 2,450Km in 2010 4,763Km double-track railway line added to the existing network in 2012 3.90 0.7% 2011 2012 Passenger Volume (Bn) 1.80 1.62 1.89 Electrification of network expanded by 6,054Km in 2012 Chinese Railways planning to complete railway network of 120’000 km by the 12th Five-Year Plan from 2011-2015 11.1% 2010 4.9% 2011 2012 11
    • Infrastructure Overview - Seaways China’s Coastline is ~14,500 Km Compared to India’s 7,515Km Freight Volume(Mn Tons) 4.2 3.8 11.7% Shanghai Port was the highest container handling port in 2011 with a capacity of 31.7 TEUs 2010 179,200 transportation ships being used for transportation purposes 6 ports ranked among the top 10 cargo handling ports across the world 4.6 7.8% 2011 2012 Passenger Volume (Mn) 260 240 221 8.6% 8.3% 54 seaports along the coastline of China 2010 2011 2012 12
    • Infrastructure Overview - Aviation Beijing Capital International Airport was Asia’s Busiest Airport in 2012 with 81.9Mn passengers International Airports Domestic Airports Passengers (Mn) 564 10.1% 9.5% Commercial Airports 2010 37 680 621 2011 2012 146 Cargo Handled (Mn Tons) 183 Airports handled 680Mn passengers in 2012 compared to 815.3Mn passengers of the US Low cost carriers account for only 5% of the total market compared to India’s 69% in 2012 Aircraft Movements (Mn) 6.0 5.5 8.1% 2010 6.6 2.6% 2010 119.9 115.8 112.9 3.6% 2011 2012 10.4% 2011 2012 13
    • Infrastructure Overview - Roadways Freight Volume(Bn Tons) World’s 3rd Largest Road network of 4.2Mn Km in 2012 28.1 24.4 14.9% Length of Expressways was 96,200Km in 2012 2010 3.4 Mn Paved roads & ~650,000 Km of Unpaved roads in 2011 32.2 14.6% 2011 2012 Passenger Volume (Bn) 35.4 32.7 30.4 58,672 Km road network including 9,910 Km Expressways added in 2012 $551 million investment for constructing roads in Tibet region for the period of 2011-2015 7.4% 2010 8.3% 2011 2012 14
    • Table of Contents Summary Macroeconomic Environment Infrastructure Overview Sector Overview IT Market Landscape International IT majors / Indian Companies Landscape 15
    • Aviation Sector- Overview Beijing Capital International Airport was Asia’s Busiest Airport in 2012 with 81.9Mn passengers International Airports Domestic Airports Passengers (Mn) 564 10.1% 9.5% Commercial Airports 2010 37 680 621 2011 2012 146 Cargo Handled (Mn Tons) 183 Airports handled 680Mn passengers in 2012 compared to 815.3Mn passengers of the US Low cost carriers account for only 5% of the total market compared to India’s 69% in 2012 Aircraft Movements (Mn) 6.0 5.5 8.1% 2010 6.6 2.6% 2010 119.9 115.8 112.9 3.6% 2011 2012 10.4% 2011 2012 16
    • Automobile Industry-Overview 7%GDP contribution by Automotive Manufacturing in 2012 Largest producer of Automobiles in the world with a production of 19.2Mn cars in 2012 23.6Mn 2-Wheeler sales registered in 2012 ~$38.9Bn investment made for capacity expansion for the period of 2008-2012 Automobile Production (Mn) Passenger Cars Commercial Cars 15.5 14.5 13.9 4.4 2010 3.9 2011 3.7 2012 Motor Vehicle Exports($Bn) 12.7 9.9 53.1Mn cars were privately owned in 2012, increasing by 22.8% over 2011 28.3% Volkswagen is the leading player with a share of 19.5% in 2012 compared to 18% in 2011 Wuling(Local partner of GM), Nissan, Honda, Kia Motors & Toyota are the leading players in the sector 2011 2012 Exports also include spare parts of motor vehicles 17
    • IT/ITeS Industry Overview IT Expenditure ($Bn) China’s 69 Million PC shipments surpassed United States 66 Million in 2012 2012 8.4% 80.8 87.6 13.1% Ranked 51st in the IT readiness index compared to India’s 69th rank in 2012 11.4% 2.7 2.5 Hardware 600 500 2010 2011 2012 Public Cloud Market Forecast 2012 2016 457.3 Software 513.1 28.7% CAGR $11.2 Bn IT Services 564 400 300 34.3% 100.0% 80.0% 38.3% 200 42.1% 60.0% 40.0% 20.0% 100 $4.1 Bn 26.8 30.2 16.1 17.9 Foreign Direct Investment in IT/ITeS ($Bn) 3.4 2013 0 0.0% 2010 2011 Internet Users (Mn) 2012 Internet Penetration 18
    • Education Sector-Overview High Adult Literacy rate of 94% compared to India’s 74% in 2012 Tertiary Education Enrolments (Mn) 6.9 6.8 6.6 *age 15 and over can read and write 1.9% GDP expenditure on education lower than India’s 3.2% in 2011 ~36.85 Million students were enrolled in schools in 2012 2010 2011 2012 Secondary Education Enrolments (Mn) 8.5 8.5 8.4 ~97 million students were enrolled in primary education as of 2012 R&D Expenditure 2.0 1.3 1.5 1.0 0.5 1.0 1.6 100% 80% 60% 28.8% 0.0 40% 2010 2011 2012 Vocational Secondary Education Enrolments (Mn) 8.7 8.1 7.6 20.7% 20% 0% 2010 2011 R&D Expenditure ($Bn) 2012 Growth Rate(%) 2010 2011 2012 19
    • Telecom Industry-Overview Largest Mobile Subscriber Base of 1.1Bn users compared to India’s 895Mn in 2012 3G subscribers increased to 232.8Mn as of 2012 1,200 1,000 800 600 400 200 - Mobile Users & Mobile Penetration 859 74.5% 1,112 986 77.6% 82.6% 100% 80% 60% 40% 20% 0% 2010 2011 2012 Mobile Users(Mn) Mobile Penetration Mobile internet user base is ~ 420Mn people in 2012 Telecom Industry Landscape Internet Users & Penetration 600 500 3G Market Share 457.3 513.1 33% 29.6% 300 34.3% 38.3% 200 0 21.3% 14.3% 42.1% 60% 40% 20% 100 Mobile Subscribers 64.4% Share 100% 80% 400 37.4% 564 0% 2010 2011 Internet Users (Mn) 2012 Internet Penetration 20
    • Telecom Industry-Growth Drivers Voice calling time reached to 2.7 trillion minutes in 2012 compared to 2.4 trillion minutes in 2011 SMS volume was 897.3 billion in 2012 increasing by 2.1% over 2011 International call time increased by 36.2% over 2011 to reach 360 ​million minutes MMS business volume increased by 16.2% over 2011 to reach 69.7 billion in 2012 Increase in voice services Extensive use of VAS for marketing & communication Expansion of broadband network Broadband network being expanded in 19,000 villages in 2013 Broadband network in 2005 townships being installed as part of broadband expansion 26.7 Million Km of Optic fiber cable laid out in 2012 21
    • 4G/LTE Implementation Leading Telecom Players China Mobile Launching 4G/LTE in 344 cities Deploying combined investment of $56Bn for implementing 4G/LTE Target Base as of 2012 1.1Bn Mobile subscribers 22
    • Healthcare Sector-Overview $41.8Bn spent on healthcare infrastructure in 2012 Healthcare Personnel (Mn) 5.5 5.9 6.2 6.5 2010 2011 2012 Healthcare network in China: • • • • • • 23,005 general hospitals 37,128 township health centers 33,646 community health service centers 179,644 clinics 663,355 village clinics & 3,037 health monitoring institutions 5.6 Million Hospital beds in 961,830 medical and health institutions as of 2012 compared to 5.2 million beds in 2011 Healthcare & Pharmaceutical Expenditure Pharmaceuticals ($Bn) 2009 Healthcare Personnel Breakdown-2012 Healthcare($Bn) 452.5 378 82.1 97.1 PersonnelPopulation Ratio (per 10,000) Number 2012 2013 18.6 17.8 2.52 Mn 2.42 Mn 23
    • Retail Industry-Overview Retail Sales ($Bn) China E-Commerce industry valued at ~$200Bn compared to $224Bn of the US in 2012 ~80% of the Market unorganized as of 2012 compared to 92% in India 250 200 150 194 37.8% 42.9% 8.4 9.5 6.6 100% 80% 60% 50 20% - 0% 2011 2012 2010 2011 2012 40% 100 Number of Users (Mn) 2011 Foreign Direct Investment in Retail Sector ($Bn) E-Commerce Users & Penetration Ratio 242 2,315.7 2010 Urban Retail accounted for 86.7% of the total retail sales in 2012 300 2,841.5 3,327.1 2012 Penetration Ratio (%) 2 of the biggest malls in the world are located in China: • New South China Mall with built-up area of 659,612 sq.mts • Golden Resources Mall with built-up area of 557,419 sq.mts 24
    • BFSI Sector-Overview Loans ($Bn) Investment on expansion of Banking Network increased from $14.7Bn in 2012 from $9.7Bn in 2011 10,645 8,990 Non-performing loans ratio declined from 0.97% in 2011 to 0.92% in 2012 Government Debt ~50% of the GDP as of 2012 7,406 10,744 2010 12,773 2011 2012 5.0% 5.3% 6.1% 37.4% 39.9% 59.5% Deposits ($Bn) 2011 35.6% ~7.1Bn people living in urban areas driving demand for banking services 2010 57.4% 54.1% 14,920 2012 2010 Long Term Loans 2011 Short Term Loans 2012 Other Loans 25
    • Energy Sector-Overview China has Asia’s largest Coal reserves of 114.5Bn tons followed by Australia’s 74.6Bn tons as of 2011 • $65Bn investment in wind, solar, and other renewable energy projects in 2012 • The investment increased by 20% over 2011 Foreign Direct Investment in Energy sector was valued at $1.6Bn in 2012 802Mn Kilowatt electricity capacity added in 2012 compared to 904Mn Kilowatts in 2011 Electricity Generation(Terawatt hr) Crude oil 114.5 billion tons Natural Gas Renewable Power 14.7 million barrels Coal 3.2 billion cubic 78.3 Terawatt hours Oil Production & Consumption Oil Production(000 Barrels per day) Oil Consumption (000 Barrels per day) 9,324 8,924 4,347 4,416 4,700 4,208 2011 11.7% 2010 Reserves of Natural Resources 2011 2012 Net oil imports increased from 4,5Mn Barrels per day in 2011 to 4,907 in 2012 26
    • Table of Contents Summary Macroeconomic Environment Infrastructure Overview Vertical Insights IT Market Landscape Connectivity - PC, Broadband and Mobile Penetration Social Media Penetration IT Spending estimates and SMB status Government ICT Plans International IT majors / Indian Companies Landscape 27
    • Zinnov Point Of View 28
    • China Positive China’s industrial and services sector to drive its growth Large working population and investments in Positive Forecasted to be the largest economy based on GDP by 2025 education to produce even more productive workforce Neutral Negative GDP decreased marginally but is expected to grow in the coming years Poor governance and corruption along with strict norms for doing business in the country 29
    • Zinnov Management Consulting For more details and complete copy of the report, write to us at info@zinnov.com Thank Thank You You 69 "Prathiba Complex", 4th 'A' Cross, Koramangala Ind. Layout 5th Block, Koramangala Bangalore – 560095 Phone: +91-80-41127925/6 First Floor, Plot # 131, Sector - 44, Gurgaon – 122002 Phone: +91-124- 4420100 3701 Patrick Henry Dr. Building 7 Santa Clara CA – 95054 Phone: +1-408-716-8432 21, Waterway Ave, Suite 300 The Woodlands TX – 77380 Phone: +1-281-362-2773 info@zinnov.com www.zinnov.com @Zinnov This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov