AMI-Partners: China MBs to Invest over US$20B on IT Solutions This Year.

--The top three priorities are deploying high-speed Internet, networking hardware in the main office and enhancing IT security, says AMI study--

SINGAPORE -- Medium businesses (companies with 100 to 999 employees) across China are set to invest a huge US$20.9 billion to reinforce their IT infrastructure and solutions this year. That's up 18% over last year, with the bulk of the spending being on IT services, computing and the Internet.

That comes from the latest study by New York-based Access Markets International (AMI) Partners, Inc. "A sizeable number of medium businesses (MBs) in China have crossed the first two waves of IT adoption, and are now in the third wave, which focuses on the extension of the enterprise," says Balaji Sreedhar, Singapore-based Research Analyst at AMI-Partners.

The first wave of IT adoption involves building the basic IT infrastructure (such as having personal computers and using basic accounting and HR tools). The second wave involves connecting within the enterprise (such as using local-area networks and servers). And the third wave involves connecting outside the enterprise (such as with suppliers, resellers, channel partners, and customers). MBs in China are increasingly adopting enterprise software such as ERP and CRM. Nearly 25% of China MBs have adopted ERP and close to 20% have CRM software in place.

"AMI's survey indicates that further adoption of these two solutions is extremely likely in the next 12 months," Mr. Sreedhar says. "We will see companies like Oracle and SAP locking horns to increase their market share across China's medium business segment this year."

Other technologies being adopted by MBs are SAN and NAS. The surge in business growth is leading to an avalanche of data for these MBs, prompting a significant number to adopt these storage technologies. SAN and NAS account for 25% of spending on storage hardware in the MB segment currently.

IT decision makers typically prefer to purchase brands they have bought before, after carefully considering the total cost of ownership (TCO) and primarily purchase products that are scalable. Very few MBs use internal funds to buy IT products; they typically opt for either financing or leasing options.

The top three priorities for MBs in China this year are deploying high-speed broadband Internet access, networking all hardware in the main office and enhancing IT security and privacy. "MBs in China are expanding fast and are adding more employees to their rolls," Mr. Sreedhar says. "This trend is forcing most MBs to invest in higher speed broadband, networking office equipment and increasing their IT security."

On the other hand, the top three factors hindering the growth of MBs in China are an uncertain economic environment (especially the appreciating Reminibi against the dollar which, in turn, is affecting exports), the lack of cash flow, and the ever increasing local and global competition. "Despite these issues, MBs in China will continue to march ahead, mainly due to the appetite of the global economy for Chinese products," says Mr. Sreedhar. The medium business segment is poised for some exciting times ahead, so IT vendors are advised to keep a close eye on the huge opportunities that they can still tap."

About the Studies

AMI's 2006-2007 China Medium Business Overview and Comprehensive Market Opportunity Assessment highlights major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI's annual surveys of MBs across China, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail [e-mail], or visit the AMI Web site www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.