China Tech Market In 2014: Five Key Predictions
Since 2012, China has become the second-largest economy and third-largest IT market in the world, but IT spending per capita in China is still less than 5% of US. The potential for IT spending growth is obvious in the coming years. For CIOs in China to succeed, they need to go beyond retaining “control” of technologies to focusing on retaining and winning customers.
Forrester recently published its technology predictions for Asia Pacific in 2014, highlighting to technology professionals that the ability to embrace the age of the customer will determine success or failure of an organization. We believe that we have entered “a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.”
In particular, CIOs in China should take note of the following five key 2014 predictions:
- Technology spending is slowing down in China and local vendors will gain share. According to my latest China Tech Market Outlook: 2014 report, Forrester estimates that China’s enterprise IT purchases will grow by 6% in 2013, to RMB 698 billion, and a further 8% in 2014, to RMB 752 billion. This is slower than then 11% growth in 2011 and 9% growth in 2012. The new government is focusing on economic reforms to overcome both internal and external challenges. In the meantime, local vendors like Huawei, Inspur, and Lenovo will likely benefit from the NSA/Snowden issue; they will gain share mostly in the hardware space, including server, storage, and networking, in 2014.
- China will become the world's largest eCommerce market. The number of online buyers in China alone will reach 356 million in 2014 — surpassing the entire US population. At the same time, the value of the nation’s online retail market reached $294 billion in 2013, the first time that it’s been larger than the US market, which is estimated at $262 billion. The Chinese online retail market will continue to grow, to $604 billion in 2017. The growing eCommerce market has not only established disruptive online retail giants like Taobao or JD.com, but is also reshaping traditional retailers to transform their online and offline businesses.
- Smartphones will become life hubs for most Chinese consumers. We used to call a smartphone a “third screen” — something that consumers use for connection and content consumption. But in 2014, for many consumers in China, the smartphone will begin to resemble a “life hub” — a connected hub for people’s lives. Smartphones will begin to connect with fitness devices, smart watches, and smart TVs; they will also become the tool for consumers to make a lot more of their purchases and payments. Forrester estimates that 48% of all Chinese mobile phone subscribers will own smartphones in 2014, and this number will grow to 64% in 2017.
- Customer experience will surge as a priority. With technologies disrupting the way organizations serve and communicate with their customers, customer experience will become a hot topic for CIOs in the hypercompetitive Chinese market. Forrester believes that mature firms will spread out internal responsibility for customer experience improvement; more firms will adopt the Net Promoter Score as their customer satisfaction standard; and more large firms will rely on external consulting to realize their customer experience vision. Forrester is currently working on creating a version of our popular Customer Experience Index (CXi) for China; we will announce the results at our Marketing & Strategy Summit in Shanghai on March 19, 2014.
- Big data and analytics will gain popularity, but few IT organizations will meet business demands. Big data remains a problematic term; it’s technology-centric and doesn’t appeal to or excite business decision-makers. On the other hand, analytics has been increasingly regarded as an important tool for business units in the areas of new product development, personalization for financial services, and customer segmentation for retail. Forrester believes that customer engagement will drive BI, big data, and analytics investments in China in 2014, especially at banking/finance and retail organizations. CIOs at many other Chinese organizations will face a broader big data agenda, including big data architecture, use case for predictive analytics, and big data-related skills and training issues.
Success in the age of the customer is more than just technology — it hinges on organizations shifting their cultures, organizational structures, and mindsets to win in this new era. Businesses will call upon CIOs and their teams to support these changes and broaden their scope beyond IT (infrastructure) to include business technology (BT) — technologies, systems, and processes to win, serve, and retain customers.