china - country and it market study (summary)
DESCRIPTION
Forecasted to be the largest economy based on GDP by 2025TRANSCRIPT
Zinnov Management Consulting
This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov
China - Country and IT Market (Summary) Global Market Expansion Advisory
For more details and complete
copy of the report, write to
us at [email protected]
2
Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Vertical Insights
IT Market Landscape
International IT majors / Indian Companies Landscape
3
Table of Contents
Summary
More
than
~ 767 Mn strong Labour force ~ 215 Mn Youth ~ 51 Mn SMEs
1.1 Billion mobile subscribers
2nd largest E-commerce market in the world
Overtakes US as the largest PC market
4
Summary - Macroeconomic Environment
GDP 2012-16
9.2% CAGR
Debt remains at low level if local
governments and agencies debt is not
taken into account
China’s working population expected to
decrease in years to come
China’s unemployment level remains at
low level compared to other emerging
countries
$ Growth driven by Industry and Services
sector, Government initiatives
23% Debt/GDP
ratio
36.3 Median
Age
4.1 %
Unemployment
Positive
Neutral
Source: IMF, Central Statistical Organization
Neutral
Negative
5
7%GDP contribution by Automotive Manufacturing in
2012. Automobile exports valued at $12.7Bn in 2012
E-commerce industry valued at $200Bn in 2012
Unorganized retail accounts for 80% of the total
market
China has Asia’s largest Coal reserves of 114.5Bn
tons. Foreign Direct Investment in Energy sector was
valued at $1.6Bn in 2012
Beijing Capital International Airport was Asia’s Busiest Airport in 2012 with 81.9Mn passengers
Low cost carriers account for only 5% of the total market
Non-performing loans ratio declined from 0.97% in
2011 to 0.92% in 2012
Summary - Vertical Insights (1/2)
~15.5 Mn car sales;
7.2% YoY growth
$3,327 Bn retail
sales; 17.1% YoY
growth
4,700 Twh electricity
generated in 2011;
11.7% growth over
2010-11
680 Mn passenger
travel; 9.5% YoY
growth
$10,645Bn Loans;
18.4% YoY growth
Positive
Positive
Neutral
Automotive
Retail
Energy/ Power
Aviation
Banking
Figures for 2012 unless quoted separately; YoY growth for 2011-12
Positive
Neutral
6
Summary - Vertical Insights (2/2)
IT/ITeS Market driven by Hardware components.
69Mn PC shipments in 2012
$123.7Bn expenditure
on IT/ITeS
Rapid urbanization driving real estate growth
~$1,007 Billion
invested in real estate
in 2011
Largest Mobile Subscriber Base of 1.1Bn users in
2012. Mobile internet users were ~420Mn
1.1Bn mobile
subscribers in 2012;
YoY addition 12.8%
High Adult Literacy rate of 94%
1.9% GDP expenditure on education
6.9Mn enrolments in
tertiary education in
2012; 1%YoY growth
$41.8Bn spent on healthcare infrastructure in 2012.
Strong workforce of 6.5Mn healthcare personnel
$378Bn expenditure
on Healthcare
Positive
Positive
Positive
Healthcare
IT/ITeS
Real-Estate
Telecom
Education
Figures for 2012 unless quoted separately; YoY growth for 2011-12
Positive
Negative
7
Summary – IT Market Landscape
PC Installed
Base 69 Million units shipped in 2012
Smartphone
Users
China accounted for 22% of total
smartphone shipments Over 330 Million
Mobile
Subscribers
Largest mobile subscribers in the
world Over 1.11 Billion
Internet Users ~420 Million mobile internet
users Over 564 Million
Total Domestic
IT Market
Hardware (65%), IT Services
(22%), Software (13%) $ 122.9 Billion
Over 356 Million
8
Basic Facts & Figures
Source:
Beijing: 2nd largest populated city in China. It is home to the headquarters of the most of China’s largest state-owned companies
English, Mandarin, Cantonese and several other local languages
Chinese religion (78%), Buddhist(9%), Others (12%)
Guangzhou: Capital and largest city of Guangdong province. A key national transportation hub and trading port
Fiscal Year – Calendar Year (1st January to 31st December)
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
Chinese Yuan (sign: 元; code: CNY)
9
Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Sector Overview
IT Market Landscape
International IT majors / Indian Companies Landscape
GDP Forecasts
Financial Performance
Governance scores
Demographics details
10
Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Sector Overview
IT Market Landscape
International IT majors / Indian Companies Landscape
11
Infrastructure Overview - Railways
2nd Largest Railway Network of 98,000 Km as
of 2012
Launched world’s longest high speed railway line from Beijing to Guangzhou spanning a length of 2,450Km in
4,763Km double-track railway line added to the existing network in 2012
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
3.64 3.93 3.90
2010 2011 2012
Freight Volume(Mn Tons)
8% 0.7%
1.62 1.80
1.89
2010 2011 2012
Passenger Volume (Bn)
11.1% 4.9%
12
Infrastructure Overview - Seaways
China’s Coastline is ~14,500 Km
Compared to India’s 7,515Km
Shanghai Port was the highest container handling port in 2011 with a capacity of 31.7 TEUs
179,200 transportation ships being used for transportation purposes
6 ports ranked among the top 10 cargo handling ports across the world
54 seaports along the coastline of China
3.8 4.2
4.6
2010 2011 2012
Freight Volume(Mn Tons)
11.7% 7.8%
221 240
260
2010 2011 2012
Passenger Volume (Mn)
8.6% 8.3%
13
Infrastructure Overview - Aviation
37
International Airports
Domestic Airports
Commercial Airports
Beijing Capital International Airport
was Asia’s Busiest Airport in 2012 with 81.9Mn passengers
564 621
680
2010 2011 2012
Passengers (Mn)
10.1% 9.5%
112.9 115.8 119.9
2010 2011 2012
Cargo Handled (Mn Tons)
2.6% 3.6%
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
8.1%
5.5 6.0 6.6
2010 2011 2012
Aircraft Movements (Mn)
10.4%
146
14
Infrastructure Overview - Roadways
World’s 3rd Largest Road network of 4.2Mn Km in 2012
Length of Expressways was 96,200Km in 2012
3.4 Mn Paved roads & ~650,000 Km of Unpaved roads in 2011
58,672 Km road network including 9,910 Km Expressways added in 2012
$551 million investment for constructing roads in Tibet region for the period of 2011-2015
24.4 28.1
32.2
2010 2011 2012
Freight Volume(Bn Tons)
14.9% 14.6%
30.4 32.7
35.4
2010 2011 2012
Passenger Volume (Bn)
7.4% 8.3%
15
Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Sector Overview
IT Market Landscape
International IT majors / Indian Companies Landscape
16
Aviation Sector- Overview
37
International Airports
Domestic Airports
Commercial Airports
Beijing Capital International Airport
was Asia’s Busiest Airport in 2012 with 81.9Mn passengers
564 621
680
2010 2011 2012
Passengers (Mn)
10.1% 9.5%
112.9 115.8 119.9
2010 2011 2012
Cargo Handled (Mn Tons)
2.6% 3.6%
183 Airports handled 680Mn passengers in 2012 compared to 815.3Mn passengers of the US
Low cost carriers account for only 5% of the total market compared to India’s 69% in 2012
8.1%
5.5 6.0 6.6
2010 2011 2012
Aircraft Movements (Mn)
10.4%
146
17
Automobile Industry-Overview
13.9 14.5 15.5
4.4 3.9 3.7
2010 2011 2012
Passenger Cars Commercial Cars
Automobile Production (Mn)
23.6Mn 2-Wheeler sales registered in 2012
Volkswagen is the leading player with a share of 19.5% in 2012 compared to 18% in 2011 Wuling(Local partner of GM), Nissan, Honda, Kia Motors & Toyota are the leading players in the sector
Largest producer of Automobiles in the world with a production of 19.2Mn cars in 2012
7%GDP contribution by Automotive Manufacturing in
2012
9.9
12.7
2011 2012
Motor Vehicle Exports($Bn)
Exports also include spare parts of motor vehicles
~$38.9Bn investment made for capacity expansion for the period of 2008-2012
53.1Mn cars were privately owned in 2012, increasing by 22.8% over 2011
28.3%
18
IT/ITeS Industry Overview
80.8
16.1 26.8
87.6
17.9 30.2
Hardware Software IT Services
2012 2013
IT Expenditure ($Bn)
8.4%
11.4%
13.1%
China’s 69 Million PC shipments surpassed United States 66
Million in 2012
457.3 513.1
564
34.3% 38.3% 42.1%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0
100
200
300
400
500
600
2010 2011 2012
Internet Users (Mn) Internet Penetration
Public Cloud Market Forecast 2012 2016
$4.1 Bn
$11.2 Bn
28.7% CAGR
Ranked 51st in the IT readiness index compared to India’s 69th rank in 2012
2.5 2.7
3.4
2010 2011 2012
Foreign Direct Investment in
IT/ITeS ($Bn)
19
Education Sector-Overview
High Adult Literacy rate of 94% compared to India’s 74% in 2012
*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
~97 million students were enrolled in primary education as of 2012
6.6 6.8 6.9
2010 2011 2012
Tertiary Education Enrolments (Mn)
8.4 8.5 8.5
2010 2011 2012
Secondary Education Enrolments (Mn)
8.7 8.1 7.6
2010 2011 2012
Vocational Secondary Education Enrolments (Mn)
1.0
1.3
1.6
28.8% 20.7%
0%
20%
40%
60%
80%
100%
0.0
0.5
1.0
1.5
2.0
2010 2011 2012 R&D Expenditure ($Bn) Growth Rate(%)
R&D Expenditure
20
Telecom Industry-Overview
Largest Mobile Subscriber Base of 1.1Bn users compared to
India’s 895Mn in 2012
457.3 513.1
564
34.3% 38.3% 42.1%
0%
20%
40%
60%
80%
100%
0
100
200
300
400
500
600
2010 2011 2012
Internet Users (Mn) Internet Penetration
Internet Users & Penetration
Mobile internet user base is ~ 420Mn people in 2012
3G subscribers increased to 232.8Mn as of 2012
859 986
1,112
74.5% 77.6% 82.6%
0%
20%
40%
60%
80%
100%
-
200
400
600
800
1,000
1,200
2010 2011 2012 Mobile Users(Mn) Mobile Penetration
Mobile Users & Mobile Penetration
3G Market Share
Mobile Subscribers
Share
33% 37.4%
14.3% 21.3% 64.4%
29.6%
Telecom Industry Landscape
21
Telecom Industry-Growth Drivers
Broadband network being expanded in 19,000 villages in 2013 Broadband network in 2005 townships being installed as part of broadband expansion
SMS volume was 897.3 billion in 2012 increasing by 2.1% over 2011
MMS business volume increased by 16.2% over 2011 to reach 69.7 billion in 2012
International call time increased by 36.2% over 2011 to reach 360 million minutes
Voice calling time reached to 2.7 trillion minutes in 2012 compared to 2.4 trillion minutes in 2011
Extensive use of VAS for
marketing & communication
Expansion of broadband network
Increase in voice services
26.7 Million Km of Optic fiber cable laid out in 2012
22
4G/LTE Implementation
Leading Telecom Players
1.1Bn Mobile subscribers
Deploying combined
investment of $56Bn for
implementing 4G/LTE
China Mobile Launching 4G/LTE in 344 cities
Target Base as of 2012
23
Healthcare Sector-Overview
5.5 5.9
6.2 6.5
2009 2010 2011 2012
Healthcare Personnel (Mn)
Healthcare Personnel Breakdown-2012
Personnel- Population Ratio (per 10,000)
Number 2.52Mn
2.42 Mn
18.6 17.8
Healthcare network in China: • 23,005 general hospitals • 37,128 township health centers • 33,646 community health service centers • 179,644 clinics • 663,355 village clinics • & 3,037 health monitoring institutions
5.6 Million Hospital beds in 961,830 medical and health institutions as of 2012 compared to 5.2 million beds in 2011
82.1 97.1
378
452.5
2012 2013
Pharmaceuticals ($Bn) Healthcare($Bn)
Healthcare & Pharmaceutical Expenditure
$41.8Bn spent on healthcare infrastructure in 2012
24
Retail Industry-Overview
2,315.7
2,841.5 3,327.1
2010 2011 2012
Retail Sales ($Bn)
6.6
8.4 9.5
2010 2011 2012
Foreign Direct Investment in Retail Sector ($Bn)
194
242
37.8% 42.9%
0%
20%
40%
60%
80%
100%
-
50
100
150
200
250
300
2011 2012 Number of Users (Mn) Penetration Ratio (%)
E-Commerce Users & Penetration Ratio
China E-Commerce industry valued at ~$200Bn compared to $224Bn
of the US in 2012
~80% of the Market unorganized as of 2012 compared to 92% in India
Urban Retail accounted for 86.7% of the total retail sales in 2012
2 of the biggest malls in the world are located in China:
• New South China Mall with built-up area of 659,612 sq.mts
• Golden Resources Mall with built-up area of 557,419 sq.mts
25
BFSI Sector-Overview
7,406
8,990
10,645
2010 2011 2012
Loans ($Bn)
59.5% 57.4% 54.1%
35.6% 37.4% 39.9%
5.0% 5.3% 6.1%
2010 2011 2012 Long Term Loans Short Term Loans Other Loans
10,744 12,773
14,920
2010 2011 2012
Deposits ($Bn)
Government Debt ~50% of the GDP as of 2012
~7.1Bn people living in urban areas driving demand for banking services
Non-performing loans ratio declined from 0.97% in 2011 to 0.92% in 2012
Investment on expansion of Banking Network increased from $14.7Bn in 2012 from $9.7Bn in 2011
26
Energy Sector-Overview
Reserves of Natural Resources
Coal
114.5 billion tons
Natural Gas
3.2 billion cubic
Crude oil
14.7 million barrels
Renewable Power
78.3 Terawatt
hours
4,347 4,416
8,924 9,324
2011 2012
Oil Production(000 Barrels per day)
Oil Consumption (000 Barrels per day)
Oil Production & Consumption
Net oil imports increased from 4,5Mn Barrels per day in 2011 to 4,907 in 2012
4,208 4,700
2010 2011
Electricity Generation(Terawatt hr)
11.7%
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
27
Table of Contents
Summary
Macroeconomic Environment
Infrastructure Overview
Vertical Insights
IT Market Landscape
International IT majors / Indian Companies Landscape
Connectivity - PC, Broadband and Mobile Penetration
Social Media Penetration
IT Spending estimates and SMB status
Government ICT Plans
28
Zinnov Point Of View
29
Forecasted to be the largest
economy based on GDP
by 2025
China’s industrial and services sector to drive its
growth
Large working population and investments in
education to produce even more productive
workforce
Positive
Positive
Poor governance and corruption along with strict
norms for doing business in the country
GDP decreased marginally but is expected to grow in
the coming years
Negative
Neutral
China
Zinnov Management Consulting
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This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
Thank You
For more details and complete copy of the report, write to us at [email protected]