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Issue No. 19 - October/November 2004
China makes its own way
Standards Procedure
Everyone recognises China as a low-cost manufacturer and a huge potential market. But most do not realise China is emerging as a key player in shaping technology standards. This report looks at how these standards could define global competition in the technology, media and telecommunications sector for years to come.
The main driving force is economics. The Chinese Government recognises that shaping technology standards for its own market could be of huge benefit to its economy.
China wants to reduce its dependence on foreign companies and cultivate its own technology industries – moving its economy from low-tech commodities to high-tech products, hopefully to fetch a premium in the global marketplace.
By defining its own standards for the Chinese marketplace, royalty payments to foreign companies can be reduced and the local technology, media and telecommunications industry can have a platform to develop new products and create new markets.
China is using its massive markets and spectacular growth as leverage in the standards war.
For example: the country's domestic market for electronic information products has grown from $20.2 billion in 1999 to $77.1 billion in 2002. China is the world's largest mobile phone market, currently boasting 300 million subscribers.
The Chinese are expected to buy 27% of the world's total production of notebook computers – nearly a third more that last year.
Countries with small technology sectors, such as Australia, could collaborate with Chinese companies on the development of standards – this could improve prospects for selling into the Chinese market.
As China's markets grow and its IT standards take root, Chinese firms will be in a position to disrupt global IT markets. If Australian companies collaborate with Chinese companies, they could benefit from the disruption.
Deloitte expects Chinese manufacturers to begin by building critical mass of support a...
