CCID Consulting: China`s Information Industrial Development`s Opportunities and Challenges in the Context of Global Financial Crisis

BEIJING--(Business Wire)--
CCID Consulting, China`s leading research, consulting and IT outsourcing service
provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong
Stock Exchange: HK08235), recently released its article on China`s information
industrial development`s opportunities and challenges in the context of global
financial crisis.

The opportunities and challenges in China`s information industry is a question
the industry always thinking, different people in different time point will have
different answers. In the specific context of global financial crisis has large
impact on China`s information industrial development, there is special value of
thinking this question.

1. Challenges

Challenge I: industrial cyclical adjustment has large pressure, financial crisis
leads to sharp decline in external demands, which has great impact on industrial
downlink.

Judging form the development law in the industry, China`s electronic information
industrial inflexion has appeared in 2007; this trend is confirmed in 2008, the
growth rates of industry size and profitability have decreases. Global financial
crisis leads the external demands` sharp decline, which further increases
downward adjustment pressure. The industry faces large adjustment in short-term.

This situation has obvious performance in electronic information products`
export. In the first two months of 2009, China`s electronic information
products` exports have double-digit negative growth. This situation couldn`t
have large improvement in next few months.

Challenge II: Global economic slowdown will result in China`s electronic
manufacturing enters mild growth period after long-term high-speed growth period

Judging from world economic growth, after experienced many years` low inflation
and high growth, currently, world economy has entered adjustment period. World
economic growth needs a long process to return to the past five or ten years`
average level, which will result in global IT market`s slow growth. Global
economic slowdown has negative impact on China`s electronic manufacturing, whose
average export dependence is 60% in the past three years.

Financial crisis may change American over-consumption`s economic growth mode,
weaken the external demands for China`s electronic information products in
medium and long-term and strengthen the impact on China`s IT industry.

Challenge III: financial crisis has obvious impact on the whole machine
equipment manufacturing in 2008, its impacts on components and information
service industry (including software) gradually emerge

Affected by industry transfer and demand transmission mechanism, financial
crisis has obvious impact on computer, home audio & video and consumer
electronics in 2008, this impact also reflects in component industry in 2009.
Information service industry (including software) is also difficult to avoid the
impact: on one hand, economic downturn will suppress information service
industrial demands (including software); on the other hand, electronic
manufacturing sharp decline will further affect information service industrial
demands (including software), although it will have certain lag effect.

Challenge IV: trade protectionism emerges, trade friction will intensify

In fact, with the world economic further deterioration, trade protectionism
trend is on the rise, which is similar to the trade protectionism in 1930s.
Financial crisis`s further deterioration leads that various national economies
are facing difficulties. Many international conferences, including Group of 20
Summit Meeting calls on all States to refrain from trade protectionism, but in
fact, in order to protect home economy, protectionism trend is inevitable in the
rise.

In recent years, with larger market share and greater international influence,
China`s electronic information industry has become the focus field of
international trade friction; some States use various means to obstruct China's
exports. In the impact of financial crisis, developed countries` international
purchasing power has decreased; China`s electronic information products` price
advantage is obvious. China`s electronic information products` export will face
more trade barriers and frictions.

2. Opportunities

Opportunity I: the convergence of informatization and industrialization provides
great development space for industry development

On the Seventeenth National Congress of the Communist Party of China, the CPC
Central Committee puts forward to consider industrialized, information-based,
urbanized, market-oriented and internationalized country as the new task of
China`s economic development, and greatly promotes the convergence of
informatization and industrialization.

On traditional industrialization road, it not only develops productivity, but
also pays the costs of excessive consumption of resources and destruction of the
ecological environment. With information technical emergence, infiltration and
catalytic, information technology has general applications in all areas of the
national economy, which could greatly improve labor productivity, reduce
resources` consumption, production cost and environmental pollution. Insisting
informatization driving industrialization, and industrialization promoting
informatization, realizing the convergence of informatization and
industrialization are benefit to China to develop to new industrialization.

With the convergence of informatization and industrialization, and the
promotions of industrialized, information-based, urbanized, market-oriented and
internationalized courses, information infrastructure and information technology
industries will have more rapid development; its share in national economy will
be further improved. Currently, relevant state government departments and local
governments are actively implementing this spirit to the specific areas, which
is benefit to accelerate the pace of information technology reconstructing
traditional industry, and provides great development space for industrial
development.

Opportunity II: China`s economic impact on information industrial development
will gradually strengthen, domestic demands and independent innovations become
important impetus of information industrial new round development, therefore,
domestic demands-based information service industry (including software), and
the industries, which need to strengthen independent innovation and break
through, are expected to have rapid growth

China`s information industrial growth mainly relies on export, but export`s this
function obviously weakened in 2007, this trend is more obvious in 2008. From
the proportion more than 88% of the electronic information industry view, its
export dependence has decreased from over 60% to 57.5%, which shows China`s
domestic market`s impact on the industry is strengthening.

Judging from medium and long term, compared with world economy, the growth rate
of China`s economy has slowed down, and it faces great adjustment pressure, but
its growth rate is still higher than the average growth rate of world economy.
Thus domestic demand-based information services (including software) are still
expected to maintain relatively fast growth.

China has encouraged independent innovation since 2005 and has issued a series
of policy support to independent innovation, such as National Guideline on
Medium-and Long-Term Program for Science and Technology Development (2006-2020).
These policies provide specific acts for promoting independent innovation and
breaking through industrial bottleneck from capital investment and personnel
training. In particular, State Council discusses and passes two national science
and technology implementation plans --high-end general chips and software
products based on and greatly large-scale IC manufacturing equipment and
complete technology, which will promote the whole industrial independent
innovation ability, and the developments of IC and software.

Opportunity III: Chinese government promulgates economic stimulating policy and
China's Stimulus Plan for the IT & Electronics Industry, which are benefit to
weaken the financial crisis`s impact in short-term and create favorable
opportunity for industrial medium and long-term development

Aiming at global financial crisis`s unfavorable impact, State Council
promulgates ten measures to promote economic growth; China invests 4 trillion
Yuan to stimulate domestic demands; State Council passes China's Stimulus Plan
for Ten Industries, the People's Bank of China issues many measures to implement
appropriate monetary policy; General Administration of Customs of the People's
Republic of China raises export refund rate for many times. Meanwhile, in order
to response the spirit of Central`s stimulating domestic demands, local
government and ministries at all levels actively promulgate specific measures
and strengthen investment. E.g., the Ministry of Water Resources of the People's
Republic of China invests 20 billion Yuan to speed up water infrastructure
construction; Ministry of Railways plans to invest 600 billion Yuan to expand
railway construction in 2009.

The above measures, especially China's Stimulus Plan for the Electronics
Information Industry, will stimulate industry growth in short-term, especially
directly drive the growth of electronic manufacturing so as to reduce the
financial crisis`s impact on industry; meanwhile, these measures not only base
on current situation, but also have long-term planning, which will promote
China`s information industrial technical upgrade and structure adjustment in
medium and long-term development, and provide good opportunity for industrial
medium and long-term development.

Opportunity IV: 3G licenses` official issue is one of the impetuses of China`s
information industrial development

In 2009, Chinese government officially issues 3G licenses, which will provide
powerful impetus of China`s information industrial development. According to
telecom operators` development planning, the direct 3G investment in 2009 and
2010 will reach 280 billion Yuan. According to three operators` 3G network
construction planning; 3G construction investment in next three years will reach
400 billion Yuan. 3G is expected to boost social investment 2 trillion Yuan.

3G industrial development in China will drive the development of equipment
manufacturers and related service industries, such as advertising, ISP/ICP
content providers` development, so as to have an important impact on information
industrial development.

Opportunity V: Based on the advantage in China`s financial market, China`s IT
enterprises develop specific customers and purchase technology so as to acquire
short-term opportunities

Financial crisis will weaken financial impetus on European and American
information industries in short term, which restrict European and American IT
giants` investment and financing to some extent; based on the advantage in
China`s financial market, China`s enterprises develop specific customers and
purchase technology so as to acquire short-term opportunities. Global financial
crisis provides opportunities for ZTE developing overseas market, especially its
European and American market. ZTE is discussing with China Development Bank
about $15 billion financing plan, this financing will be applied to ZTE`s
overseas market development in the future. In the past, the operators in
developing countries lack of capital, so China provides help; at present,
because of financial crisis, some operators in developed countries hope to have
more capital to pull through difficulty times, ZTE cooperates with China`s
financial institutions to provide buyer's credit, so European and American
operators will have more capital space.

Meanwhile, financial crisis forces some European and American IT enterprise to
get into financial difficulties in short-term, which provides short-term
opportunity for China`s enterprises` technology purchase.

About CCID Consulting

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first
Chinese consulting firm listed in the Growth Enterprise Market of the Stock
Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with
China Center for Information Industry Development (hereinafter known as CCID
Group). Headquartered in Beijing, CCID Consulting has so far set up branch
offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300
professional consultants after many years of development. The company's business
scope has covered over 200 large and medium-sized cities in China.

Based on major areas of competitiveness: industrial resources, information
technology and data channels, CCID Consulting provides customers with public
policy establishment, industry competitiveness upgrading, development strategy
and planning, marketing strategy and research, HR management, IT programming and
management. CCID Consulting's customers range from industrial users in
electronics, telecommunications, energy, finance, automobile, to government
departments at all levels and diversified industrial parks. CCID Consulting
commits itself to becoming the No. 1 advisor for enterprise management, the No.
1 consultancy for government decisions and the No. 1 brand for informatization
consulting.

CCID Consulting Co., Ltd.
Cynthia Liu, +86-10-8855-9080
Coordinating Manager
liuyan@ccidconsulting.com

Copyright Business Wire 2009