Without a doubt, the COVID-19 pandemic will hit China’s GDP hard in the first quarter of 2020. As the virus spreads throughout our highly connected world, it will inevitably have a significant impact on the global economy.
As such, Forrester has adjusted our initial forecast of China’s tech spending for 2020. As China’s government is undertaking massive efforts to contain the coronavirus, growth will likely bounce back in the second half of the year if the outbreak doesn’t worsen.
China’s tech market will see a similar pattern: Tech spending will drop by 2% in Q1, but as the government and enterprises accelerate the adoption of digital technologies to improve adaptiveness, the full-year growth rate will return to 4.5%, slightly lower than our earlier forecast of a 6.6% growth. In a more pessimistic scenario where the situation doesn’t improve, Forrester predicts that the China tech market could potentially decline by 6% in Q1 (-2% in H1) with an aggregate growth of only 2.3% for the full year. Similarly, we are also revising our global tech market forecast, where the odds of a tech market decline has increased significantly.
In addition, there are also several lessons that organizations around the world can learn from how the coronavirus has impacted China’s tech market. The global epidemic is symptomatic of the connectedness of today’s world and the pace at which things spread and change in it. Companies, supply chains, and ecosystems are inextricably connected, and any changes in customer needs, technology, and business trends in one corner of this global ecosystem will ripple across the globe.
While China plays a key role in the global supply chain, the global ecosystem is also critical to China’s business growth. China still completely or partially relies upon foreign offerings in critical technology areas like chipsets, robot sensors, and industrial design software.
To address the challenges in the global business ecosystem and sustain business growth, organizations worldwide must proactively accelerate loops between technology and humans and adapt their enterprises to rapidly exploit opportunities. CIOs must help companies improve their adaptiveness in terms of market, technology, and organization. Emerging technologies and platforms will play a critical role on this journey.
Here are some steps that they can take to transform their organizations into adaptive enterprises (more Chinese examples detailed in the report):
- Start with market adaptiveness
- Invest in emerging and platform technologies to enhance tech adaptiveness
- Use collaboration, automation and motivation to improve organizational adaptiveness