ICT vendors must prepare for China’s 13th Plan

As China moves to implement its 13th Five-Year Plan, ICT vendors need to reassess their positions to take advantage of the major business opportunities it will offer, according to IDC.

China’s 13th Five-Year Plan, and the decisions and policies introduced at the Third Plenary Session of the 18th Central Committee of the Communist Party of China will serve as the roadmap and action plan for the country’s economic development over the next five to ten years.

Based on these two guiding documents and amid a challenging macroeconomic environment, the Chinese government has rolled out a host of policies and initiatives to advance the cause. These efforts will bring huge opportunities and become the cornerstone of China’s IT market in coming years, IDC predicts.

IDC sees six areas that will be the foundation for China’s economic development as follows:

1. Some 165 major projects to maintain economic growth – IDC estimates that total investment in these 165 projects will exceed 6 trillion yuan ($900 billion), generating over 500 billion yuan ($ 75 billion) in ICT business opportunities, with 300 billion yuan ($45 billion) alone in the rollout of 5G.

2. Innovation to advance economic restructuring – The Chinese government has established innovation and entrepreneurship as two of its top policy initiatives to facilitate economic restructuring. IDC believes that such government-led endeavors will generate immense business opportunities for ICT vendors in ICT infrastructure; cloud computing and big data; mergers and acquisitions of startups; and the transition of traditional industries to digital.

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3. Policies to improve public well-being – In 2016, the State Council issued a joint initiative to promote Internet+Government services and kicked off 80 pilot cities with the One Window One Network plan that introduced interregional sharing of electronic certificates and public service information across government offices.

For ICT vendors, the main business opportunities will be ICT infrastructure, cloud computing and services, big data platforms, smart community, and mobile apps, which are seen as the basis for the digital transformation of government.

4. The Belt and Road Initiative to facilitate globalization – Initially introduced in 2013, this initiative has connected 18 of China’s provinces with nearly 40 countries along its route across Asia and Europe. For ICT vendors, IDC predicts the initiative to  give rise to abundant business opportunities as Chinese companies venturing abroad upgrade their IT systems, countries along the route construct their IT infrastructures, and China develops its own big data platforms for the initiative.

5. Expanding Free Trade Zones – The first Free Trade Zone (FTZ) was established in Shanghai in 2013. In 2014, the second batch of FTZs was established in Tianjin, Guangdong, and Fujian. In 2016, Liaoning, Zhejiang, Henan, Chongqing, Sichuan, and Shanxi provinces were approved to set up FTZs. Currently, 11 FTZs have been established across China. Collectively, they support the Belt and Road Initiative in promoting globalization and the smooth development of China’s economy.

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According to IDC, ICT vendors should focus on developing smart parks, smart transportation, smart logistics, and other smart city projects, in addition to utilizing the cloud platform infrastructure to support the digital transformation of FTZ regions.

6.China as an internet powerhouse – China’s national IT development strategy was first introduced in 2006 and has acted as the basis of many of China’s IT development policies since then. In 2016, the Chinese government introduced an outline that standardizes and guides the next 10 years of China’s IT development.

To remain competitive in this market, multinationals will have to radically transform many things, including their domestic business models, strategic investment, technology transfer, equity transfer, and joint investment strategy.

“ICT vendors should capitalize on China’s supportive policies and economic environment, making use of ICT technologies and displaying their strengths to discover the opportunities being brought by Digital Transformation,” IDC China VP and chief analyst Lianfeng Wu said.

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