The Chinese government has placed great emphasis on developing the high technology sector. Measures have included providing policy incentives, establishing high-tech zones and providing development funding.
It has also focused on developing basic software capability, integrated systems, large scale key application software and next-generation internet projects.
In 2008 the number of China-based internet users had reached 298 million with a penetration rate of 22.6 percent. Wireless internet growth has seen increased demand for internet via mobile phone with 117 million users.
The main ICT sub-sectors are:
- software - the Chinese software industry has undergone rapid development in the past 10 years. The market remains somewhat dominated by foreign brands
- hardware - China is the world’s second (after the US) largest ICT hardware producer
- telecommunications - a large and very competitive market. The telecoms service market is dominated local companies, but there has been sizeable foreign investment. International infrastructure equipment manufacturers are also present
- IT services - banks, telecommunications companies, manufacturers and the government are investing in IT services. Outsourcing is expected to account for approximately 30 percent of this expenditure.
Getting your product into market
Because of intense competition, it is important for New Zealand companies to position themselves carefully and strategically in China.
ICT products are mainly sold through distributors, systems integrators or directly into the retail market. Only limited sales are currently made via the internet. The traditional direct sales model has not yet been successfully applied in China.
China should be considered not as one market, but as many markets with different idiosyncrasies with differences from one province to another.
Regulations
Exporters wanting to take advantage of New Zealand’s free trade agreement (FTA) with China need to submit a China FTA Certificate of Origin with their outgoing consignments. These preferential provisions include tariff reductions and guaranteed clearance of the goods through Chinese Customs within 48 hours if all documentation is complete and correct.
The FTA also includes a Mutual Recognition Agreement on Electrical and Electronic Equipment which facilitates conformity assessments of a range of electrical and electronic products.
Opportunities
- Monitor and check the outcomes of the New Zealand China FTA as it may lead to opportunities to gain an advantage over competitors from other countries.
- In general, the Chinese ICT market continues to provide good commercial opportunities as China continues to develop at a relatively high speed.
- The China market has good prospects for customised software products such as software for e-learning, mobile marketing, information security, agriculture and dairy applications.
- The New Zealand China ICT Cooperation Agreement promotes exchanges and cooperation in areas such as development and application of new ICT technologies and services, use and governance of the Internet and control of spam, ICT standards and e-government and e-commerce.
- China will see great demand for IT consulting, enterprise management solutions, information storage and management systems, network security products and wireless application solutions.
Challenges
- Competition in the ICT space in China is fierce. There are already many multinational corporations in the market.
- The retail market in China is fraught with difficulties and unlikely to provide viable opportunities for many New Zealand software companies.
- Protecting intellectual property is one of the biggest issues New Zealand firms face when entering China.
Download the full Market Profile for ICT in China for more detail, including key contacts and useful websites.
