Date:25/08/11

China overtakes US in PC sales as tech firms try to tap huge potential market

In what will undoubtedly be seen as yet another sign of the shifting global economic sands, China has topped the US in terms of quarterly PC sales for the first time, according to the latest stats from IDC.

The analyst firm recorded shipments of 18.5 million units in the People's Republic in the second quarter of 2011, compared to 17.7 million units in the US. The US is expected to end the year on top thanks to strong festive sales, but China will triumph in 2012 and, given its inexorable growth, for years to come.

IDC predicted that China will ship 85.2 million units compared to the US figure of 76.6 million in 2012, or a market share of 21.8 per cent versus 19.6 per cent.

"China's lead in the PC market is a huge shift that reflects the rising fortunes of emerging markets as well as the relative stagnation of more mature regions," said Loren Loverde, programme vice president at IDC's Worldwide PC Tracker.

"While the immediate economic circumstances in the US and other markets had a significant impact on the timing of China's move into the lead, they have not changed the trend, but accelerated it."

The stats come after a tough few months for the US and eurozone economies. The sovereign debt crisis in Europe is showing no signs of abating, while the US had its AAA credit rating downgraded for the first time in its history, as politicians foolishly turned the economy into a points scoring exercise and failed effectively to address the underlying problems.

It's not a massive overstatement, then, to say that the People's Republic of China has finally taken up its position as the preeminent global economic powerhouse.

This will mean different things for different businesses in different sectors, of course. However, across the board it should reinforce the notion among those who haven't done so already that a Chinese outpost is now a necessity, not a nice-to-have.

Aside from providing a neat little snapshot into the growing wealth of a nation whose economic potential has still not been realised, the growing number of PC users in China will have the pound signs flashing in the eyes of tech entrepreneurs everywhere.

Jeff Kim, COO of CDNetworks, a firm which helps content providers expand their presence in the region, was naturally optimistic of the opportunities that lay behind the IDC figures.

"This is clear evidence that China's growing middle class, already known for its strong consumerism, is also highly computer and internet literate," he told us. "We see the trend continuing as evidenced by the recent high growth in the amount of web site and application content that we serve to Chinese internet users on behalf of our content provider customers."

The big name vendors have certainly wasted no time. Apple is reportedly building a cheaper version of its iPhone for emerging markets such as China, while Nokia chose Hong Kong on Wednesday as the venue to launch three Symbian Belle-based phones, which it hopes will make a big impact on these markets and help turn around its fortunes.

For those interested in tapping the vast Chinese market, however, there are still big barriers, and businesses would do well to keep their eyes fully open before taking the plunge, as we've highlighted before on Frontline. Hong Kong and Singapore, for example, can provide a useful hub and stepping stone from which to eventually expand operations into China.

However, firms that continue to procrastinate in expanding their bases into Asia and eventually China, in industries from publishing and accounting to finance and technology, will be left behind as their more agile and forward thinking competitors speed past. And rightly so.

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