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China to dominate Asia Pacific enterprise networking equipment spending: Springboard

Carol Ko | May 25, 2009
Finance and public sector to boost spending

HONG KONG, 25 MAY 2009 Greater China's share in the Asia Pacific (excluding Japan) enterprise networking equipment spending will grow from 43 per cent in 2008 to 46 per cent by 2012, said Springboard Research.

According to a new report from Springboard, titled Networking China: Greater China Enterprise Networking Equipment Market & Forecast, 2008-2012', the networking equipment market in Greater China (including China, Hong Kong, and Taiwan) is estimated at US$2.6 billion for 2008.

The research was done through a survey of 100 IT decision-makers in enterprises in Greater China, providing key end-user insights into networking equipment adoption and usage, and analyses the customer mind share of major vendors.

Fast-growing domestic enterprises

The research shows that the enterprise networking equipment market is forecast to grow at a compound annual growth rate (CAGR) of 13 per cent, to reach US$4.3 billion by the end of 2012.

China signifies an emerging opportunity in Asia Pacific for enterprise networking, given the fast-paced growth of domestic enterprises as they expand their business footprints beyond existing boundaries, and a strong manufacturing vertical, said Bryan Wang, research director for connectivity at Springboard.

Moreover, the ambitious investment plans of the government to pursue various e-governance initiatives and the country's preferential location in the region also makes China a lucrative market, Wang said.

Chinese government's stimulus plan

Unlike other regional markets, banking, financial services and insurance (BFSI) and public-sector investments in enterprise networking will continue to rise significantly through to 2012, emerging as the key demand drivers in the Greater China region, said Springboard.

Wang said: BFSI is among the largest networking spender in China and hence represents a lucrative business opportunity for equipment vendors. Also, the recently announced economic stimulus plan by the Chinese government will build upon significant recent public-sector investments in network deployment; thus increasing overall spending on networking.

Small and medium-sized businesses in China have also emerged as big networking spenders according to a Springboard survey of 100 IT decision-makers in enterprises of all sizes spread across the Greater China region. Forty-five per cent of mid-market respondents covered in the survey said their networking budgets comprise more than 40 per cent of their IT budgets.

Top networking concerns

The survey also revealed that the top three networking concerns of Chinese enterprises are network performance, network security and risk, and network efficiency. Main factors called out by survey respondents that influence their network purchasing decisions are equipment provider's expertise, technological strength and value for money, in that order.

Compared to other country markets in the region, Chinese customers still spend a large portion of their IT budget on infrastructure-related products such as router/switches, security, and voice equipment, Wang said.

 

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