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Information & Communication Technology

Includes: Integrated Circuits, Software, Telecom, and Safety & Security

Integrated Circuits

INDUSTRY OVERVIEW
In recent decades, the semiconductor industry has become one of China’s key industries. China’s plan to make integrated circuit (IC) production one of its core industries by 2010 significantly encourages an already rapidly growing market. This market encompasses the key elements of the semiconductor industry value chain: wafer fabrication, testing and packaging, and IC design. China’s semiconductor production has experienced an annual growth rate of 25 percent since 2000, which is more than three times the GDP growth rate during the same time period. At present, most semiconductors made in China are for low and mid-level consumer products. As much as 90 percent of China’s domestic need is met by imported semiconductors, which creates opportunities for U.S. exporters.

MARKET OPPORTUNITIES:
Market Demand

With growing expectations surrounding China’s semiconductor business in the next five to ten years, there are many opportunities for overseas companies. Most investment will be directed towards setting up new fabs, resulting in the purchase of semiconductor equipment in large quantities. China still lacks the technology to produce equipment for large wafer size production and advanced processing, and so depends heavily on imports to build foundries as well as testing and assembly companies.

Best Prospects
The best prospects for integrated circuits market in China include:

Wafer fabrication equipment
High end wafer fabrication equipment for nano-scale wafer processing remains a key need for China wafer fabs. U.S. companies are dominating this market.

Development tools for the design of integrated circuits. Along with China’s tremendous market potential for IC chips, there is the requirement that chip design be localized to match local applications. A trend for U.S. chip designers is to transfer their low-end technology to qualified and trustworthy partners in China.

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Software

INDUSTRY OVERVIEW
China’s software industry remains a key focus for the nation’s central government, with incentives for both domestic growth and foreign investment. At present, the market remains diverse and highly fragmented, with over 16,000 local-certified software companies, approximately 40,000 registered software products, and more than one million software-industry professionals. Over the next few years, the industry is expected to experience more consolidation. Overall, China’s software industry still lacks core technologies, high-end software development talent, and consistent high quality software products. Moreover, foreign brands enjoy a large market share in the high-end segment of the software market, with local software products comprising less than 30 percent of the market.

MARKET OPPORTUNITIES:
Market Demand

Further investment in IT infrastructure in such industries as finance, telecommunication, banking, education, medical, manufacturing, and the public sector will provide market opportunities for foreign and domestic software companies. A new development within China is for companies to seek improved efficiencies by using software to lower costs and improve productivity. US firms should seek opportunities in the Second and Third Tier Cities where economic growth and demand for improved IT solutions remains high.

Best Prospects The best prospects for US firms are for high-end software solutions requiring a certain level of customization. These include the following:

Application software and specialty software:
Solutions pertaining to ERP, CRM, service-oriented architecture (SOA), middleware and open-source software will have good prospects in the China market.

High-end enterprise management systems software:
Solutions that address database management systems, systems management software products, networking security software products remain some of the fastest growing areas for foreign firms selling into the China marketplace.

Specialty software:
Customized software targeted for a specific industry or market sector is a market segment in which foreign firms have an estimated 70 percent of the market. U.S. firms hold a strong position in such areas as firmware, as well as gaming, automation, digital imaging, storage, and security software.

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Telecommunications

INDUSTRY OVERVIEW
Telecommunications remains a vital industry and a source of prestige for China. The telecommunications industry has undergone a rapid transformation of growth and development for the past ten years. In 2007, for example, China’s telecom carriers invested over S$31 billion in telecom infrastructure development. As a result of this investment, Chinese telecom carriers added 101 million additional new subscribers to bring the total number of telephone users in China to 914 million. China has the world’s largest mobile phone market, with over 500 million subscribers. Moreover, there has also been tremendous growth in the number of Internet users. According to China’s Ministry of Information Industry (MII), China is now home to 210 million Internet users, including 163 million broadband users.

MARKET OPPORTUNITIES:
Market Demand

In May of 2008, plans were announced to restructure and merge its telecom carriers into three groups under China Mobile, China Telecom, and China Unicom. Such a step is expected to generate renewed demand for foreign equipment suppliers, and lead to the issuance of third generation, 3G mobile licenses. More specifically, these developments are expected to create new opportunities for manufacturers of mobile, data, and optical communications equipment. To remain competitive, the telecom carriers will in turn need to upgrade and enhance their network management and IT support systems as well as offer new value-added services to subscribers.

Best Prospects
There are a number of key opportunities for US exporters in China’s burgeoning telecommunications market:

Mobile Communications
Mobile communications remains the most profitable sector in China’s telecommunications service industry and accounts for 47% of the total industry revenue. In order to offer new services, base stations, switches, and network optimization solutions will be needed for this expansion.

Value-added Services
To generate additional revenue and remain competitive, telecom operators are focused on developing new services, especially value-added services. Operators are also open to partnerships with other service or solution providers.

IP and Broadband
IP and broadband are the top priorities for China’s fixed line telecom operators as they will need additional wire line Internet access products such as ADSL, LAN and Ethernet. Wi-Fi and WiMax for wireless Internet access will also be required.

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Safety & Security

INDUSTRY OVERVIEW
China’s safety and security market has averaged 20 percent annual growth the past several years, generating over US$17 billion in sales in . China is undertaking numerous large-scale projects nationwide including airports, sports stadiums, and metro systems which will entail the installation of extensive security systems. A growing affluent class is demanding high quality residential security equipment and services, and municipalities are installing emergency response systems to improve security and bolster response times. While US firms enjoy a solid reputation in the high end of the market, the safety and security market in China remains very fragmented, with over 15,000 small local enterprises active in this sector. Before selling into China, US exporters need to be aware of required China certification requirements as well as potential US export controls, pertaining the Tiananmen Sanctions and Department of Commerce’s Bureau of Industry and Security (BIS) regulations.

MARKET OPPORTUNITIES:
Market Demand

China’s fast growing economy and numerous large-scale construction projects, have contributed for high demand for video surveillance, door access, and burglarproof alarm equipment. China’s public sector is a strong market segment for safety and security products, particularly for such agencies dealing with finance, customs regulations, education, and transportation. High-end residential areas and commercial office buildings require sophisticated surveillance equipment for monitoring and controlling access. In addition, China’s central government is supporting projects to install a city-wide infrastructure of security, surveillance, and alarm systems as part of a strategy for more effectively maintaining order and stability.

Best Prospects:
Much of the safety and security demand will focus on high-tech equipment, such as digital technology, entrance guard communication systems, network technology for inspection control systems, and warning systems.

Video surveillance equipment
Approximately 80 percent of video surveillance equipment is sold for commercial offices, including financial institutions, shopping malls, and transportation facilities. In the public security field, video surveillance equipment has been widely applied in a range of infrastructure projects, such as airports, correction facilities, and the safe city initiatives.

Door access and burglarproof alarm equipment
Market demand for door access systems are mainly driven by city construction projects, transportation systems, tourism sites, and sports stadiums. US companies currently dominate the top-end of the market; Europeans firms have a larger presence with mid-quality products; and local firms control the low-end.

Fire Protection Equipment
While domestic competition in this sector is high, there is also a strong demand for fire detection equipment and trucks. All imported equipment must first obtain safety certification from the China Fire Bureau.

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Major Shows and Exhibitions

This section provides a listing of upcoming information technology as well as safety and security-related events in China, including industry shows and trade missions. While FCS China is directly involved with some of these events, the majority here have no direct relationship with the FCS and are listed solely as a convenience to our users.

For more information, please contact the organizing group as listed in the event description. Verify the information before making any commitments - we are not responsible for accuracy of information or changes in events' schedules.

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Useful Links and Industry Contacts

Links to non-Commercial Service organizations are provided solely as a convenience to our users. The Commercial Service makes no representations about the accuracy or suitability of the information provided on the following web sites. The FCS is not responsible for the content of the individual organization web pages found through these links, and their inclusion here should not be understood as an endorsement of these organizations.

CCC Mark (Industry policy and regulation details)

China Computer Industry Association (CCIA)

China Information Technology Security Certification Center

China National Copyright Administration

PCI Industrial Computer Manufacturers Group (PICMG)

Shanghai Information Commission

Shanghai Software Industry Association

KEY INDUSTRY CONTACTS

China Internet Network Information Center (CNNIC)
4, South 4th Street, Zhongguancun, Haidian district,Beijing 100190, China
Tel: (86-10) 5881-3000
Fax: (86-10) 5881-2666
E-mail: service@cnnic.cn
http://www.cnnic.net.cn

China Semiconductor Industry Association (CSIA)
27 Wanshou Road, Beijing 100846 China
Tel: (86-10) 6820-8589
http://www.csia.net.cn

Ministry of Industry and Information Technology (MII)
13 West Chang An Avenue, Beijing 100804, China
Tel: (86 10) 6820-8212
http://www.mii.gov.cn

Ministry of Public Security
14 Dong Cang An Street, Beijing 100741, China
http://www.mps.gov.cn

Telecommunications Equipment License Processing Office (TELPO)
Xiao Xi Tian Office:
#28 Xin Jie Kou Wai Dajie, Xi Cheng District, Beijing 100088
Tel: (8610) 6238-2481
Fax: (8610) 6238-2482
Yuetan Office:
#11 Yuetan Nan Jie, Xi Cheng District, Beijing 100045
Tel: (8610) 6809-4061
Fax: (8610) 6802-8601

SEMI
Room 2601, Tower II, Grand Gateway
3 Hong Qiao Road, Shanghai, 200030
Tel: (86-21)6448-5666
Fax: (86-21)6448-0909
http://www.semi.org.cn

Semiconductor Industry Association (SIA)
Beijing Representative Office
Room 516, Beijing Fortune Plaza Office Tower
No. 7 Dongsanhuan Zhong Lu, Chaoyang District, Beijing, 100020, China
Tel. (86-10) 6533-0438
Fax: (86-10) 6530-9367
http://www.sia-online.org

United States Bureau of Industry and Security (BIS)
US Department of Commerce, Washington DC 20230
Tel: (202) 482 4811
Fax: (202) 482 3322
http://www.bis.doc.gov

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U.S. Commercial Service Contacts

The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the ICT industry as well as the Safety and Security industry. Please refer to the following relevant contacts for additional information on how we can help you expand your business in China.

Beijing Office:

Tel: (86-28) 8558-3992

Fax: (86-28) 8558-3991

Liting Bao

Shanghai Office:

Tel: (86-21) 6279-7630

Fax: (86-21) 6279-7639

Jane Shen

Guangzhou Office:

Tel: (86-20) 3814-5000

Fax: (86-20) 3814-5310

Sophie Xiao (Telecom, Computer, Electronics, Consumer Electronics, Software)

Roya Xie (Safety & Security)

Chengdu Office:

Tel: (86-28) 8558-3992

Fax: (86-28) 8558-3991

Liping Lin

Shenyang Office:

Tel: (86-24) 2322-1198

Fax: (86-24) 2322-2206

Yang Liu

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