Overview
China, “the market of 21st century”, is a market that none of the international companies can ignore. With the enormous market scale and the nascent nature of the market, the IT market in China has highly attracted global investors’ attentions. In addition, domestic source of investment also is important components for growth in IT industry. Government spending on internet infrastructure has stimulated Software production. For year 2002, China's entry of WTO has been a important factor for the unprecedented increase in foreign direct investment. WTO agreement open up China's telecommunication service market.
Domestic Investment
According to information released by Ministry of Information Industry (MII) in 2001, China will spend one trillion yuan ( US$ 120 billion) by 2005 on its information industry. In which, 500 billion yuan will go for telecommunications, 50 billion yuan for post service, and 400 billion for electronic information technology. {China Daily}
Part of such investment is designed to propel the
development of electronic government. China's central government will invest
at least1 billion yuan (US$ 120 million) on new hardware and software
infrastructure for all levels of government over the next 5 years. The total
expenditure is expected to create an E-government market in China worth up
to 200 billion yuan (US$ 24 billion).
http://www.chinabig.com.cn/en/report/it08-3.htm
Foreign Investment
Major foreign investors in China's IT industry includes: Motorola, Nokia, Hitaji, Oracle, Microsoft, IBM, AT&T etc. Recently, there has been an influx of Taiwanese companies seeking to build semiconductor companies with the Chinese government. Semiconductor manufacturing is increasingly become a popular investment topic. A good number of companies like Grace Semiconductor Manufacturing Corporation (GSMC), Semiconductor Manufacturing International Corporation (SMIC), Intel, Motorola, National Semiconductor, etc. are setting up manufacturing facilities in China. In the recent years, investors have enhanced investment in advance process technology, from 0.35-micron process design technology to 0.25 micron and 0.18 micron.
Semiconductor majors are opting to establish manufacturing facilities in Chinese Science parks in Shanghai, Beijing, and Shenzhen. The major contributing factors are cheap land, access to abundant and uninterrupted power, water supply, engineering and other essential technical resources, and substantial tax incentives. Moreover, firms that reside in the free trade zone are exempt from paying import duty on self used materials.