China software industry reports 20% rise in revenue

China’s software sector generated 580 billion yuan (about 80.8 billion U.S. dollars) in revenue in 2007, an annual increase of 20.8 percent, the Ministry of Information Industry reported.

Specifically, sales of software products surged 22.5 percent to 201.7 billion yuan, while system integration income rose 16 percent to 147.8 billion yuan (nearly 21 billion US dollars). The income of software and information technology services hit 97.8 billion yuan (over 13 billion US Dollars), up 24.8 percent. Revenues of embedded system software hit 115.5 billion yuan (around 16 billion US dollars), up 21.8 percent year on year.

Revenues generated from integrated circuit design jumped 16.8 percent year on year to 17.1 billion yuan, maintained steady increase in recent years: the market scale was USD 2.65 billion in 2004; it is estimated that it will amount to USD 6.23 billion in 2009, and the Compound Annual Growth Rate in the following five years will be 18.7%.

Currently, foreign manufacturers still dominate domestic software market. Among the top ten mainstream manufacturers in the software market in 2005, seven were foreign manufacturers, whose market shares accumulatively accounted for more than 80%.

The domestic IT service market scale was 82.3 billion yuan (over 11 billion US dollars) in 2005, and it will increase 20.4% annually from 2006 to 2010.

From the perspective of industry, Chinese software companies have certain development opportunities in the application software field. In the aspect of customers, domestic software companies may form competitive advantages in application software of the government department and middle and small enterprises market. Presently, some domestic enterprises have become leaders in some segmented fields, such as Shanda in online game field, UFIDA and Kingdee in middle and small enterprise management software, Kingsoft and Rising in security software, etc.