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Beijing Olympics to impact China PC market

Posted: 28 Jul 2008 ?? ?Print Version ?Bookmark and Share

Keywords:China PC industry? post Olympics slowdown? Beijing Olympics?

Because of China's massive economy, the Olympic Games are expected to have limited impact on China's PC market, according to Gartner Inc. Analysts said a post Olympics slowdown is unlikely as PC penetration is still low in small cities and towns. Thus, there are many opportunities to drive PC shipments in the country.

With total Olympic investment approaching $40 billion, accounting for 1.2 percent of China's GDP, a report by mainland-based Gartner analysts Simon Ye and Eileen He said the event would have a lesser impact on China than it had on the host countries of recent Olympics. This conclusion is partly explained by the fact that China is already preparing to host the Shanghai World Expo and the Asian Games in 2010.

"The Beijing Olympics will slightly influence PC shipments in the short-term instead of dramatically driving demand," said Simon Ye, principal research analyst at Gartner. "However, the Olympic Games provide a great opportunity for PC vendors to gain long-term returns by brand building. The long-term impact of the Olympics on the PC market will be in pushing IT infrastructure development in China."

According to the report "Olympic Games to Boost China's PC Market Somewhat," the Olympics have generated important business opportunities in the construction industry through the building and upgrading of sports stadiums and other facilities, and also in service industries.

"The latest scientific and technological developments will be widely applied in building, installing and improving venues and facilities. As basic hardware infrastructure, PCs will be widely used to upgrade the application level, and this will promote the technological progress of related industries," said Ye.

According to Gartner, PC shipments in 1H 08 are in line with forecasts and China will continue to maintain double-digit growth through 2012.

"We believe the visible impact of the Olympic Games will last for four to five months, from the torch relay which started in May in China, and continue until one month after the event closes by the end of August," said Ye. "The games themselves will have no influence on the PC market after Q1 09. Balancing all the positive and negative factors, and indicators such as population, PC penetration rate, increased tourism and promotions, the Olympic Games will contribute about 1.5 percent of growth to the 21.9 percent growth expected in 2008, and 0.2 percent of growth to the 21.3 percent forecast for Q1 09."

According to Ye, the factors driving China's PC market are the low PC penetration rates in many small cities and towns, high interest in PCs from China's younger generation and the fact that PCs are more affordable than ever before. Although inflation soared in 2008, the average income in China increased accordingly. PC prices are dropping and high inflation is actually stimulating PC purchases.

"PCs are tied tightly with people's daily life and work," Ye said. "Internet surfing, gaming and online entertainment have become popular leisure activities, while millions of small and mid-size businesses are emerging, with the PC being their main business tool."

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