The IT industry maintained a high speed of growth in China in the first half of this year, but experts warn that the future may not be all smooth sailing .

"In spite of the worldwide technological slowdown, the sales of computer products grew by one-fifth on a year-to-year basis and it just highlights the development potentials of the Chinese market," said Yang Tianxing, president of CCID Consulting, an IT marketing research firm.

The production of computer hardware and software reached 145 billion yuan (US$17.5 billion), while sales amounted to 112 billion yuan (US$13.5 billion) from January to June, according to statistics from the consulting firm.

Laptops and software products were the two fastest developing products, with the former increasing by 45 per cent in sales and the latter by almost 33 per cent.

The telecommunications market also took off. Chinese telecommunications operators and equipment producers harvested 189 billion yuan (US$22.9 billion) in the first six months.

Meanwhile, the number of mobile phone subscribers has risen to 120 million and the number of fixed phone users has increased to 164 million.

The research agency was optimistic about IT industry in the second half of this year.

"Although the growth rate in the first six months is quite high compared with recessions in many parts in the world, we believe the industry will see a 25 per cent increase for the whole year," Yang said.

With the implementation of the 10th Five-Year Plan (2001-05) in the latter half of this year, many industries will focus on information technology, increasing purchase demands for IT, according to Yang.

The three major telecommunications operators, China Telecom, China Mobile and China Unicom, are each expected to invest between 79.5 billion yuan (US$9.6 billion) and 110 billion yuan (US$13 billion) in fixed assets this year.

China's approaching entry into the World Trade Organization will also bring opportunities for the development of international markets for Chinese businesses, Yang said.

However, experts warned Chinese IT businesses to prepare for a bumpy road ahead.

"We should not overlook the impacts of the downslide of the world market for us. The growth of the global IT industry is below 20 per cent for the first time since 1979," Yang cautioned.

Moreover, a growing number of international companies have strengthened their positions in China, increasing overall competition.

Foreign computer makers like Dell and IBM have launched their low-price strategy to woo business away from their Chinese counterparts.

(China Daily 08/31/2001)