Good times fuel China's SMB spending

Riding the economic wave, small and midsize businesses in China are investing more in IT and high-speed Internet access, a new study shows.

Bolstered by a booming economy, small and midsize businesses (SMBs) in China are expected to invest more in IT, a new study has found.

According to a recent study by New York-based AMI-Partners, SMBs in China are slated to spend US$46 billion on new IT infrastructure, excluding telecoms, by 2010. This is up from US$21 billion in 2005, representing a compound annual growth rate of 14 percent between 2005 and 2010.

In a statement Thursday, Diana Ng, a Singapore-based senior analyst at AMI-Partners, said: "Riding on the current momentum, and with the Olympics in Beijing in 2008 and the Shanghai World Expo in 2010, the business and economic growth potential in China remains very bullish."

Apart from the more developed Chinese cities of Beijing and Shanghai, which will witness spurts in SMB investments in technology, second-tier cities like Guangzhou, Hangzhou, Chengdu and Wuhan will also ride the IT growth wave.

Ng said that besides infrastructure investments, SMBs in these six cities are looking to use the Internet to expand their business regionally and globally. They are expected to spend US$2.9 billion in areas such as high-speed Internet access deployment and channeling resources to develop corporate Web sites and e-commerce facilities.

The analyst urged infocomm vendors to look outside Beijing and Shanghai to tap into the second- and third-tier cities across the Chinese mainland.

"As Beijing and Shanghai become saturated, it is only natural and essential to plan for entry into other nascent cities," Ng said. "The sooner infocomm vendors realize this and act, the better their prospects will be going forward."