Hindi-Chini: Bhai Bhai or Bye Bye?

Consider this: small and medium businesses (SMBs, or companies
with up to 999 employees) in China will spend about $46 bn on IT by 2010up
from $21 bn in 2005notching a compound annual growth rate of 17% during the
period. By any standards, $46 bn is a huge piece of cake. The question: how do
you ensure you get a piece of it before some other vendor eats your share?

Look at the statistics first. The bulk of the IT spend will be
on boosting infrastructure, and the biggest increases in IT budgets will come in
2007 and 2008. In 2007, Chinas IT spendexcluding telecom spendwill grow
19%. In 2008, it may grow by 20%, with a huge infrastructure push coming from
the Olympic Games and Beijings rush to showcase the city as one of the most
developed capitals of the world.

The biggest spenders will be medium businesses. These will
account for over 70% of the total spend, with the bulk of investments coming
from manufacturing, according to the latest study by Access Markets
International (AMI) Partners. Spending on IT services will rise to 20% of total
IT spending in the medium business space this year. If your company is in IT
services, think about taking your business either directly or indirectly (via
partners) to China.

Where in China? Forget Beijing and Shanghai. Look at tier-2
cities like Guangzhou, Hangzhou, Chengdu, and Wuhan. These four cities are set
to ride the growth wave in areas such as formation of new businesses and
expansion of current businesses.

SMBs in these six cities alone will spend $2.9 bn by 2010 (up
80% over 2005) on such areas as high-speed Internet access deployment and on
corporate websites and e-commerce facilities. Are you geared to take advantage
and offer your wares?

What do you need to do to be able to get your finger in the
Chinese pie? Five things:

Be there: You need to set up an office, even if it is a
small office, with a China address, a Chinese website, and Mandarin speaking
sales and support staff.

Differentiate: Many Chinese dont quite trust their own
homegrown brands in high-tech. They will make comparisons between your product
and a MNC counterpart, not a local brand.

Tie up: You cant be in all 25 tier-1 and tier-2 China
cities. You need partners who will act on your behalf across the vast landscape.

Tail retail: If your product or solution has no presence in
retail and your logo is not recognized, you may be at a disadvantage. Get your
channel partners to pick up that end, as most of them have cozy relationships
with retail chains and smaller SIs and VARs.

Develop patience: You may find it takes a long time to get
the first few orders, the first few referrals, the first few case studies. But,
if you persist, your rewards will be huge.

China is very much like India in many respectshuge size, huge
population, millions of entrepreneurs, surging capitalism, bothersome
bureaucracy, and utterly unpredictable. If you could succeed in India, you
already know what to expect when you get to China. Your chances of success could
therefore be high.

Raju Chellam

The writer, a former Dataquest editor, is currently vice
president (Asia-Pacific) with Access Markets International (AMI) Partners, based
in Singapore.

He can be reached at maildqindia@cybermedia.co.in