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China - Country and IT Market Study (Summary)
1. China - Country and IT Market
(Summary)
Global Market Expansion Advisory
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Zinnov Management Consulting
2. Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Vertical Insights
IT Market Landscape
International IT majors / Indian Companies Landscape
2
3. 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
4. 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
5. 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
6. 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
7. 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
8. 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
9. 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
10. Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Sector Overview
IT Market Landscape
International IT majors / Indian Companies Landscape
10
11. 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
12. 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
13. 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
14. 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
15. Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Sector Overview
IT Market Landscape
International IT majors / Indian Companies Landscape
15
16. 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
17. 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
18. 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
19. 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
20. 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
21. 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
23. 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($Bn)
452.5
378
82.1
97.1
PersonnelPopulation Ratio
(per 10,000)
Number
2012
2013
18.6
17.8
2.52
Mn
2.42
Mn
23
24. Retail Industry-Overview
Retail Sales ($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
25. 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
26. 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
27. 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
29. 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
30. Zinnov Management Consulting
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report, write to us at info@zinnov.com
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