Software
China
Overview
China’s Software Market (2002-2006) Million USD
| x | 2002 | 2003 | 2004 | 2005 | 2006 (Estimated) |
| Total Market Size | 6,547 | 9,072 | 16,935 | 22,000 | 22,854 |
| Total Local Production | 6,875 | 10,000 | 18,625 | 18,625 | 26,125 |
| Total Exports | 1,200 | 2,000 | 2,800 | 3,590 | 4,595 |
| Total Imports | 874 | 1,072 | 1,110 | 1,214 | 1,324 |
| Imports from the U.S. | 201 | 248 | 237 | 268 | 280 |
Sources: World Trade Atlas, China Software Industry Association (CSIA), the Ministry of Information Industry (MII).
Notes: 1) Total exports also include embedded software and software outsourcing.
2) The above table is calculated based on HS codes 852410, 85243, 852432, 852439, 852451,852452, 852453, 852440, 852460, 85249,852499. Software downloaded from the Internet is not included.
China’s software industry, with the support of government incentive programs, is in a period of steady growth after more than 10 years of slow development. According to the Ministry of Information Industry (MII), sales revenue generated from software products in 2006 reached USD26 billion and accounted for 58% of China’s total software industry. IT services and system integration reached USD15.8 billion and accounted for about 42% of the total. In 2005, China’s software exports reached USD3.6 billion including USD920 million generated from software outsourcing. However, Chinese produced software only accounted for 5.9% of the global software market. Foreign software products from North America, Europe and Japan still dominate the Chinese market and will continue to have strong sales potential, especially in the high-end software market.
According to MII, China’s domestically developed operating systems account for 25% of provincial level government procurement while packaged office application software account for 60% and security software 97%.
China views the development of the software industry as one of its top priorities. The Chinese government continues to invest billions of dollars each year in the software industry and offers incentives such as a tax reduction to software developers. As a result, the number of software companies with an annual sales volume of over USD120 million increased from 27 in 2001 to 176 in 2005. The Chinese government also encourages software companies to obtain Capacity Maturity Model (CMM) and ISO 9000 certifications. Currently, 41 Chinese software developers have received both certifications, 441 have passed CMM/Capacity Maturity Model Integration (CMMI) 2-5 evaluations, and 1,800 have received qualified system integrator certificates from MII.
According to China’s “ 11th Five-Year Plan for the Software and Information Service Industry (2006-2010)”, MII expects China’s software industry to grow by 30% each year and reach USD125 billion by 2010. Software exports are projected to grow by 28% and reach USD12.5 billion. China also plans to have 10-15 software developers with an annual sales volume of over USD12 billion and 40-50 with an annual sales volume of USD6 billion. In 2007, China expects its software and system integration industry to grow by 21% and reach USD72.5 billion.
Opportunities
The finance, telecommunications, banking, education, medical, construction, media, transportation, and traditional manufacturing sectors will present opportunities not only for domestic software vendors but also for U.S. companies. Software vendors will also have good opportunities in China’s mobile business sector.
Application software and customized software such as ERP, CRM, service-oriented architecture (SOA), middleware and open-source software will have good prospects in the China market. High-end products such as database management systems, systems management software, networking security software, and manufacturing industry application software are the fastest growing areas for foreign firms selling into the China market.
Resources
Int’l Soft China 2007
China International Software and Information Service Fair
USFCS Offices in China
Beijing
Darrel Ching
Michael Wang
1 Guanghua Lu, Beijing Kerry Center, North Tower, 31st Floor
Beijing 100020 China
Tel: (86 10) 8529-6655
Fax: (86 10) 8529-6558/9
Email: Beijing.Office.Box@mail.doc.gov
Chengdu
Liping Lin
4 Lingshiguan Lu, Renmin Nanlu Section 4
Chengdu, Sichuan Province 610041 China
Tel: (86 28) 8558-3992/9642
Fax: (86 28) 8558-9221/3520
Email: Chengdu.Office.Box@mail.doc.gov
Guangzhou
Kent Guo
Sophie Xiao
Liu Hua Road
14/F China Hotel Office Tower, Room 1461
Guangzhou, Guangdong Province 510015 China
Tel: (86 20) 8667-4011
Fax: (86 20) 8666-6409
Email: Guangzhou.Office.Box@mail.doc.gov
Shanghai
Francis Peters
Jane Shen
1376 Nanjing West Road
Shanghai Center, Suite 631
Shanghai 200040 China
Tel: (86 21) 6279-7630
Fax: (86 21) 6279-7639
Email: Shanghai.Office.Box@mail.doc.gov
Shenyang
Liu Yang
52 Shi Si Wei Road, Heping District
Shenyang, Liaoning Province 110003 China
Tel: (86 24) 2322-1198
Fax: (86 24) 2322-2206