Asia's IT spend to grow faster than global numbers

Bright outlook for regional coporate IT spending next year, analyst says.
Written by Staff , Contributor

The growth of IT spending in the Asia-Pacific region will outstrip worldwide figures next year, while China will have the largest English-speaking population by 2008, predicts research firm Gartner.

In a report that outlines its key predictions of upcoming market trends, Gartner projected that total global enterprise IT spending will reach US$1,768 billion in 2006, growing at compound annual growth rate (CAGR) of 4.5 percent from 2004 to 2009.


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The Asia-Pacific is where the action is, as the region is forecast to grow faster than the global IT market

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Analysts say the region is "coming of age", with Asian companies leading development in areas of consumer technology, mobile broadband content and associated business models.

In comparison, enterprise IT spending, which includes hardware, software, telecommunications and IT services, in the Asia-Pacific region will reach almost US$210 billion in 2006 at a CAGR of 7.5 percent over the same period.

Dion Wiggins, Gartner's vice president and research director, also predicted that the language barrier China currently faces would be removed by 2008, enabling Chinese companies to work in a wider range of markets and segments. This would lead to direct competition with India, and the decline of Hong Kong's importance as the traditional gateway to China, in favor of Beijing and Shanghai.

"While English will become the preferred language of business in China, the context will remain Chinese and cultural barriers will remain," Wiggins noted, in a media statement. "It is important for enterprises to recognize these barriers and address the issues they represent."

Singapore is tipped to benefit from China's ability to overcome the language barrier, noted Wiggins, as the city-state had long positioned itself as a business partner of China. As China's proficiency in English and foreign business practices develop, so do opportunities for foreign businesses, he said.

IT and IP development
Gartner also believes IT development in the Asia-Pacific region is "coming of age", with Asian companies leading development in areas of consumer technology, mobile broadband content and associated business models. The rapid maturing of IT development in China and India, according to the research firm, will lead to an increase in trade between the two countries, resulting in firms gaining competencies that can be applied across emerging markets globally.

"As research and development (R&D) across the region gears up, we see intellectual property protection following suit," Wiggins said. "The percentage of GDP (gross domestic product) spent on R&D is rising rapidly, particularly in China, toward OECD (Organization for Economic Co-operation Development) levels and technology/IP value chains are emerging."

"This will provide the incentive for Asian companies with multinational intent to put additional pressure on governments to enforce IP protection, and support IP creation at home," he explained.

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