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Changing Technology Trends in China: 2010 and Beyond

Sunday, August 1st, 2010
tech in china

As most of Europe and the rest of North America continue to reel from the second round of the global financial crisis, China’s economic outlook continues upward. The first quarter of 2010 posted an 11.9 percent surge in economic growth, backed by an astonishing 48.5 percent jump in exports in May of this year.

Experts foresee this growth to continue in the coming quarters, as demand for Chinese products is still on the rise, despite the challenges and difficulties that have faced most markets during the past several months. The following is a brief glimpse into these market trends with a focus on the most economically viable opportunities as well as the highly risky technology-oriented trends in the nation.

EBooks, eBook Readers and Other eBook Devices

Leading the pack is the promising eBook sector, which includes the market for eBook readers and other eBook devices. The demand for these tech products have risen dramatically over the last few years and are expected to register more growth and opportunities for 2010. This is clearly evident in both the national and local levels with the rush of techno-conferences and other similar events all related to eBooks and associated products.

This trend is also clearly evident in daily suburban living, as more Chinese commuters are seen donning e-readers or are engaged in e-books on mobile phones. With China being the largest in the world in terms of mobile subscribers, the market for eBooks is expected to surge even more dramatically, as both eBook publishers and device manufacturers are jumping on the bandwagon to try and cash in.

Mobile carriers are working with publishers to open hundreds of thousands of eBooks ready for download for a price tag of a few yuan per file. This move would benchmark the successes of online giants Amazon’s Kindle and other electronic-product portals that have had tremendous success in Western markets. This budding industry would have to compete with other sites offering free downloads regardless of copyright issues, as well as illegally circulated DVDs in the market, which can be purchased for less than a dollar.

The trend and popularity of eBooks started a few years ago with the China Digital Library Project, with an investment of over $137 million in an attempt to produce multimedia versions of almost 200,000 books. Although it was not expected that the whole population would ever benefit from this digital library, but this eBook collaboration between local governments and schools would work towards the resolution of potential copyright issues that would eventually result in more market demands for this product.

These eBooks can be downloaded through a wide variety of eBook readers and devices as well as 3Gmobile phones. It is expected that the sales of eBook devices and readers will surge from the recorded 800,000 units last year to a projected 3 million units this years. Manufacturers are taking advantage of this trend with the release of new and innovative portable reading devices, including knockoffs of popular Western products such as the iPad, MacBook Air, Tablet PCs, and even a working Android tablet – releasing the products way ahead of Google.

Cloud Computing

Another big trend that is expected to produce gargantuan results is cloud computing, with strong support from the government of China and will be established in conjunction with the Special Economic Zone setup in designated areas in the nation. However, the Chinese government is banning server farm companies funded by foreign entities, thus providing the opportunities for local cloud computing companies to surge ahead in this market, including domestic cloud computing application services.

Cloud computing is basically Internet-based computing, wherein software, resources and other information are provided to users in the network on demand. As foreign companies as well as foreign application suite providers are banned in the country, local subsidiaries have worked with local governments on these projects working and established strategic cooperation deals to provide computing, storage and network services.

China’s Search Engine Wars

The world was shocked with the pronouncements made by Google that it will be pulling out of China, as the government maintains its censorship policies. This would mean goodbye to a highly potential Chinese online market numbering over 384 million and growing. With major online players like Google standing helpless against these Chinese policies, other foreign Internet companies are seeing a minimal chance of even denting this market.

The Chinese government is seeing the Internet search and social networks as threats to the social order and stability of the nation. Te so-called Great Firewall of China provided an opportunity for local and smaller search engines to dominate this market, with moves underway to include mobile phones and applications. Foreign companies wishing to jump into the fray would have a bigger chance of competing by removing any sensitive materials from their sites and focus on areas that promote job creation and economic gain – or face pressure and an eventual crackdown from the Chinese government.

More Crackdowns on Online Video

One of the reasons for the restrictions imposed by the Chinese government on Google is the proliferation of links to pornographic content from its search engine portal. This prompted the government to initiate a high-profile crackdown on online porn. This includes the requirement to include the Green Dam-Youth Escort filtering software for all new personal computers on sale in China starting July of last year. This aroused huge controversies among the Chinese public, which complained of a privacy invasion and information blockage as a result of this software.

The government has extended this stance on online materials and has initiated a crackdown on online video as well, particularly websites with copyright infringements. These restrictions were not relegated to foreign portals, but include all privately-funded online video websites in China. This left millions of Chinese Internet users no access from their previous torrent sites and free entertainment-related download sites. Websites wishing to reopen would need to resolve any potential copyright issues with their content and would need to undergo validation from the State Administration of Radio, Film and Television.

E-Commerce and Online Shopping

The prospect of marketing and cashing in from the more than 384 million Chinese Internet users is a viable economic prospect indeed, prompting both international and local players to engage and capture the e- Commerce market in this nation. This staggering figure is more than entire population of the United States, so tapping this market could prove to be lucrative.

Online payment portals like Alipay are making it possible for online transactions to proceed in the country in the same manner as Paypal with the rest of the world. This made online stores like Taobao to proliferate in the same manner as eBay but with a key difference – eBay charges fees while its Chinese counterpart relies on advertising r e v e n u e s only. This makes it more attractive for Internet users to use these channels, where Alipay projects a yearly transaction that will surpass even that of Paypal.

Younger buyers have spurned this growth in e-Commerce in China, with this demographic more open and comfortable making. Compared to the U.S. average of 12 hours a week of Internet use for users aged from 13 to 28, Chinese users average 20 hours or more a week online, according to the Chinese Market Research Group.

With the Chinese government changing e-Commerce rules and providing more control and security for conducting e-Commerce transactions in China, more Internet users would eventually shift focus from traditional commerce to online purchases and transactions – a growth that is seen to increase a projected 90 percent surge this coming year.

Technology Conferences and Other Tech Events

The clear economic indicators that China enjoys make it logical for more technology-related conferences and other events to take place in the country. This is a rebound from the rash of cancelled events during previous years, resulting from the aftereffects of the global financial crises. The six-month World Expo in Shanghai is just one major example, but there will be a huge barrage of programs, exhibitions, seminars, conferences and other events related to technology.

International business and technology leaders are expected to come to these shores once more to attend various conferences and events that would feature industry leaders and other prominent speakers in the technology, academia, business and government sectors - all focused in discussing or promoting the latest in developments in technology, cloud computing, Internet, mobile communication, and other related topics.

These events and conferences will be held in China’s top venues which include the Beijing China International Exhibition Center, the China Import and Export Fair Pazhou Complex in Guangzhou, the Shanghai Everbright Convention and Exhibition Center, the Shanghai New International Expo Center and the Shenzhen Convention and Exhibition Center.

These top technological trends in China will pave the way for the rise of various untapped markets that would benefit local, and eventually, international businesses and entrepreneurs wishing to take advantage and benefit from these indicators. As China continues to open its doors more widely in the technological arena, it is expected that more potential markets will continue to surface – which would eventually be the top trendsetters in the years to come.

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