NABE_IT_Roundtable_China_Tech_Demand_04_2010

Outlook forOutlook for
Information Technology in ChinaInformation Technology in China
Presented by:
Mark Killion, CFA
NABE Technology Roundtable
April 2010

Copyright © 2009 IHS Global Insight. All Rights Reserved.
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2
Outline
View the supply side of China’s GDP
Focus on technology related industries and services
Current outlook for sales growth of sectors in China
Review prospects for key customer “buyers” of IT
Compare IT outlook globally

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3
Manufacturing, Public Sector and Agriculture Still
Dominate the Supply Side of Chinese GDP
Manufacturing
(Includes
Electronics &
Computers
3%), 36.9
IT Services &
R&D, 3.5
Other
Business &
Related
Services, 12.5
Retail,
Wholesale, 7.9
Transport,
Storage &
Postal, 3.3
Agriculture,
10.0
Finance, 4.2
Public Admin.
& Social, 9.7
Mining, 3.9
Construction,
5.8
Utility, 3.6
Telecommuni
cations, 2.1
2009 Sector Shares of China’s GDP
(US$ 4.9 Trillion)
0
5
10
15
20
25
30
35
40
China
SouthKorea
Taiwan
Japan
Brazil
Russia
India
EMU
US
Manufacturing Value Added as Share of GDP, 1995
Manufacturing Value Added as Share of GDP, 2009
Country Comparison of Manufacturing
Share of GDP

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4
Which Sectors Buy Services Related to
Technology, R&D and Communications in China?
Households
20%
Retail,
Wholesale,
Hotels
7%
Exports
3%
Other Business
CapEx
4%
Transportion
2%
Finance
6%
Textiles, Wood,
Durables
6%
Telecoms, IT &
R&D
3%
Construction
15% Electronics
2%
Autos,
Machinery,
Utilities
9%
Chemicals,
Metals
8%
Gov't & Social
Svs
11%
Agriculture,
Food & Mining
4%
Customer Shares of Sales by China’s IT Services &
Communications Sectors

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5
Ranking of Sectors By Their Growth Outlooks
Annual Growth Rate of Sector Value Added in Real (Inflation Adjusted) Terms
Ranked by Value Added Forecast Growth in 2010, China
China United States Rest of the World
2009 2010 2011 2009 2010 2011 2009 2010 2011
Overall GDP 8.7% 10.3% 8.4% -2.4% 3.0% 2.9% -3.1% 2.2% 2.8%
1. Computers & Communication Electronics 7.1% 14.7% 13.2% -18.6% 11.8% 17.4% -17.6% 5.2% 5.3%
2. Metals & Related Mining Complex 11.7% 14.3% 12.5% -28.2% 4.8% 4.1% -15.9% 2.4% 3.3%
3. Wood & Paper 12.5% 14.3% 11.3% -16.4% 4.2% 3.5% -11.6% 0.9% 2.0%
4. Telecommunications 11.2% 13.8% 12.6% 2.1% 3.4% 3.9% 3.1% 4.0% 4.7%
5. Computing and R&D Services 10.5% 13.5% 11.7% -1.2% 3.5% 4.0% 0.2% 2.9% 3.8%
6. Electrical Industrial Machinery 11.9% 13.3% 12.7% -12.5% -0.2% 4.8% -15.7% 2.4% 3.2%
7. Aircraft & Spacecraft 12.5% 13.2% 12.0% 1.4% 1.1% 5.2% -6.4% 2.7% 3.8%
8. Banking & Finance 23.0% 12.7% 11.5% -8.9% 1.8% 2.5% -0.8% 2.5% 3.6%
9. Construction 13.8% 12.6% 9.2% -17.3% -10.1% 8.4% -4.0% 0.9% 3.0%
10. Industrial Machinery (Specialty & General) 9.1% 12.0% 10.9% -23.6% 3.1% 5.8% -22.6% 2.6% 3.2%
11. Medical & Health Care 10.1% 11.8% 11.2% 2.0% 2.8% 3.1% 2.7% 2.7% 3.0%
12. Transport & Logistics (Including equipment) 7.5% 11.5% 11.0% -8.0% 2.5% 3.7% -4.8% 3.0% 3.7%
13. Business Services 9.3% 10.7% 10.1% -2.3% 2.3% 3.0% -2.4% 2.4% 3.3%
14. Consumer Oriented Industries 10.5% 10.6% 9.8% -1.6% 2.6% 2.9% -0.4% 2.2% 2.7%
15. Chemicals Excluding Pharma 17.3% 10.1% 9.7% -10.2% 3.2% 2.1% -7.4% 2.3% 3.2%
16. Media and Entertainment 8.2% 10.1% 10.9% -6.1% 0.6% 2.1% -3.1% 1.6% 2.2%
17. Public Sector & Education 11.5% 9.5% 8.8% 4.7% 3.2% 0.4% 3.1% 2.1% 2.5%
18. Energy Complex 7.3% 7.9% 7.6% -3.6% -0.8% 1.1% -4.2% 2.1% 3.1%
19. Motor Vehicles & Parts Total 27.9% 7.4% 7.0% -29.6% 15.1% 15.5% -24.8% 7.1% 5.4%
20. Agriculture 5.2% 4.4% 3.8% 0.9% 1.8% 1.2% 0.4% 2.6% 3.4%
Accelerating
Decelerating

6
6
0
5
10
15
20
25
30
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Business Services
Construction
Financials
B
-10
0
10
20
30
40
50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Wholesale & Retail Trade
Communication Services
Transportation Services
Sector Sales Growth (Inflation Adjusted), China
Key Buyers of IT Services - 1
Annual Growth Rate of Inflation Adjusted Gross Output

7
7
0
5
10
15
20
25
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Health Care Services
Public Administration & Defense
Education Services
B
-20
-10
0
10
20
30
40
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Fixed Investment
Private Consumption
Exports
China Sector Sales Growth Growth in Components of China GDP Demand
Key Buyers of IT Services - 2
Annual Growth Rate of Inflation Adjusted Gross Output

8
8
Global Outlook for Computers and Electronics
0
2
4
6
8
10
12
14
India
U.S.
China
Russia
Japan
Taiwan
Singapore
Thailand
Malaysia
Indonesia
S.Korea
Brazil
EMU
Australia
World
Computers & Communication Electronics
Forecast Growth in Real Sales (2010-11 CAGR)
 Among the global
outlook for industries,
which countries will see
the most favorable
markets and trends?
 Technology and
electronics regain
former high water
marks by the end of
2010
 Electronics recovery is
more widely dispersed
and fundamentally
based than seen in
other sectors

9
9
Global Outlook for Telecommunications & IT Services
0
2
4
6
8
10
12
14
16
18
Indonesia
China
India
Brazil
Thailand
Malaysia
Taiwan
Singapore
S.Korea
Russia
Australia
U.S.
Japan
EMU
World
Telecommunications
Information Technology Services
Forecast Growth in Real Sales (2010-11 CAGR)
 Roll out of infrastructure
build in emerging
economies is a long term
secular trend for
communications,
transportation, utilities,
recycling and waste
management
 Communications as well as
IT services, R&D and other
related Business Services
are major beneficiaries
 IT sectors also boosted by
developments in computing
and communication
technology and hardware

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Thank you!Thank you!
Mark Killion, CFA
Group Managing Director
World Industry Service
mark.killion@ihsglobalinsight.com

NABE_IT_Roundtable_China_Tech_Demand_04_2010

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