China'S Software Industry Is Moving Against The Tide
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China's Software Industry Is Moving against the Tide

Software engg

According to the statistics of China's software industry in the first five months of 2009 published by the Ministry of Industry and Information of P.R.C., against the negative effect and press of the international financial crisis, China's software industry grows steadily and is undergoing an industrial structure adjustment; especially the software technology service industry which enjoys a higher growth rate.

From the statistics we could see that from Jan. to May of 2009, the software industry revenue was RMB 329.14 billion, up 23.3% over the same period last year, 0.2 percentage points lower than the growth of the first four months of 2009, 5.7 percentage points lower than last year.

In the first five months of 2009, the software product revenue was 115.22 billion, which accounts for 35% of software industry revenue, up 24.2% and 0.8 percentage points lower than the growth rate of last year. The software technology service revenue was 65.93 billion, up 28.2% over the same period last year; it takes up 20% of the total software industry revenue. And the ITO revenue is 8.7 billion yuan, up 84.7%; the embedded software revenue is 61.02 billion yuan, up 20.9% over the same period last year; the IC design revenue is 9.58 billion yuan, up 15.4% over the same period last year and the growth rate is 0.7 percentage points higher than the same period last year, but 7.9 percentage points lower than that of the whole industry.

In addition, the growth rate of software export is rising again, the export revenue was 6.56 billion yuan for the first five months of 2009, up 54.2% over the same period last year, and the growth rate is respectively 9.2 percentage points and 6 percentage points over the same period last year and the first four months of 2009; the export of ITO was 0.67 billion yuan, up 59% and 1 percentage point higher than the growth rate of the first four months.

We can clearly see that, although the growth rate is lower down, facing the global financial crisis, China's software industry, especially the software service outsourcing industry, still maintained a relatively stable development. And the software industry grows fastest in China under the influence of international financial crisis. While at the same time, in response to the financial crisis, the industry got a huge reshuffle opportunity, and the whole industry presents the following new features:

1. Industrial integration trend emerged. There are more than 20,000 software companies in China, with small scale and scattered distribution. But now, the financial tsunami has provided opportunities of “great trees keep down the little ones” for the software industry. The result is that the strong ones become stronger, the industrial integration is elevating, and a number of super software companies are bound to come into being, all of which provide a shortcut for the rapid development of China's software industry.

2. The software service industry is developing fast with a growth rate of 28%, and the growth rate of software outsourcing industry revenue growth reached 85%. In the software industry plan included in the national "11th Five-Year" plan which has just been finished, the goal for the software industry is to achieve an industry revenue of 1000 billion yuan in 2010, and which would be successfully realized before the end of next year. This means that in 2010, the proportion of software industry in China's GDP would reach 2%, and China will become a new center of the global outsourcing industry.

3. Domestic demand continues pulling the growth of software industry. The software industry in China is an industry that led by domestic demand, and the export revenue accounted is only less than 15%. The customers of software companies in China are mainly local enterprises. Thus the demands of China's industrial informationization directly determine the development speed of the application software industry. While the shrink of the international software market is also forcing some international market-oriented software enterprises to shift to the domestic market.

4. Industrial innovation trend is highlighted. For years, China's software industry stays in the phase of extensive growth, exchange low-cost and copying for profit. But such a model weakened under the impact of the financial crisis. The nosedive of international orders for general software products and services forced the enterprises to move to the innovation model for the survival and development, which objectively hastened the independent innovation trend of China's software industry.

Devottwww.devott.com considers that in order to realize the further and new development against the tide, China's software industry should take the following approaches:

First of all, China's software industry must achieve a historic leap from “Made in China” to “Create in China”, strengthen the adjustment and transformation to domestic market-oriented business strategy and to form a complete industry development model. At the same time, enterprises should also invest in the core capability construction and to enhance their own competitiveness.

Secondly, the development model for China's software industry must base on the global market, not limited to the domestic market. Which means China's software enterprise should pursue the "emerging market" and looking for offshore outsourcing new "cheese”.

For the last 30 years since the reform and opening up, China has accumulated and laid a good foundation on aspects like national macro-policy, business environment, software enterprise capability and international talents storage; supplemented by the domestic software development, a historical break through in the near future.

Contact:

BSSOP (Binhai Software and Service Outsourcing Platform)

Address: 3rd Floor South Wing Software Building Tianda Science Park,80 Fourth Ave. TEDA,Tianjin,300457 P.R.China

Tel: +86 22 6621 1566

Fax: +86 22 6621 1568

Email: bssopchina@gmail.com

Website: www.bssop.com

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