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China to Become an IT Giant
China is a newcomer in the high-tech market, but it has the potential to become a giant.
In a few years, China is likely to become not only the world's largest market but also a major exporter of many high-tech products, said Salomon Smith Barney Tuesday in a press release.
While foreign investment is critical for capital and technology, local producers look well positioned to take advantage of this opportunity.
The growing high-tech sector promotes and requires changes in financial institutions, especially with regard to banking, stock market and venture capital activities, noted the global investment banking and securities brokerage firm.
The importance of the high-tech sector is growing, which is evident not only in the United States but also in many Asian economies. "A similar change is taking place in China, with cellular, PC and other high-tech products sales doubling every several years, said the press release.
China is still a low-income country, but in many tech areas, such as cellular, it is already the largest market in Asia.
"The number of people that can afford most tech products in China will likely grow from the current 350 million to 630 million in 2005 as incomes rise and costs fall. Soon, China should become the world's major market for most tech products," it forecasts.
China's coastal region is likely to become a new global centre for tech production due to its low costs, massive foreign investment, reasonable skill level and upcoming WTO accession.
"With appropriate policy backing, we expect China to become a major tech exporter in 2010, overtaking not only Singapore, Taiwan and Malaysia, but also Japan," said the press release.
To facilitate the development of the industry, the government needs to make policy efforts to improve regulatory transparency, fair competition, intellectual property rights, and the flow of labour, capital and information.
The existing requirements on both local content and exports actually discourage foreign investment. The financial market should also experience significant changes, especially in bank lending, the second board, venture capital and capital account regulation.
The market for mobile phones, PCS, semi-conductors, cable TV, and Internet access (including e-commerce and other business activities) will probably expand dramatically. "As was the case in the PC market, we expect local producers, as against foreign brand names, to take a dominant role in the growth of the new economy," said the press release.
Source: China Daily
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