2008 and Fundamental Trends

Computers go to the countryside, home appliances go to the countryside. In December 2007, the Ministry of Finance and the Ministry of Commerce decided to launch a pilot program for "home appliances going to rural areas" in Shandong, Henan, and Sichuan provinces, selecting three types of products such as televisions, refrigerators (freezers), and mobile phones that farmers had a strong willingness to purchase. In early December 2008, in order to expand domestic demand, as a continuation of the central government's policy of "home appliances going to the countryside", the Ministry of Commerce and other government departments conducted an investigation into computer companies and conducted a policy survey on "computer going to the countryside". On December 31, 2008, the "Opinions of the General Office of the State Council on Revitalizing Circulation and Expanding Consumption" proposed to comprehensively promote the work of household appliances going to rural areas. Starting from February 1, 2009, the promotion of home appliances going to rural areas was extended from 12 provinces (regions, cities) to the whole country. At the same time, products such as motorcycles, computers, water heaters, and air conditioners were included in the subsidy scope of the home appliance going to rural areas policy. Subsequently, the nationwide PC sales surged, driving the overall business performance of computer hardware manufacturers to continue to improve.

The plan for revitalizing the electronic information industry has been introduced. In April 2009, the "Plan for the Adjustment and Revitalization of the Electronic Information Industry" was introduced, which stated that the sales revenue of the electronic information industry would maintain stable growth in the next three years (2009-2011), and the contribution of industrial development to GDP growth would not be less than 0.7 percentage points. And it is required to ensure the stable growth of backbone industries such as computers, electronic components, and audio-visual products, break through key technologies in core industries such as integrated circuits, new display devices, and software, and cultivate new growth points in fields such as communication equipment, information services, and information technology applications. By expanding domestic demand, increasing the tilt of new national investment towards the electronic information industry, strengthening policy support, improving the investment and financing environment, and supporting mergers and acquisitions of advantageous enterprises, we will accelerate the development of the electronic and computer industries.

Nuclear technology promotes the localization of software. In November 2009, the Ministry of Industry and Information Technology issued a notice for the application of major scientific and technological projects for core electronic components, high-end general-purpose chips, and basic software products in 2009. The basic software part of the nuclear high-tech project includes 6 projects and 20 sub projects. After nearly 20 years of difficult development, basic software in China has been officially pushed into a special channel of rapid development as the first topic in the 11th Five Year Plan. The launch of the nuclear high-tech project has provided enormous development opportunities for domestic basic software, driving the recovery of the computer industry. Upstream and downstream enterprises and developers in the software industry chain have fully benefited, and corresponding stocks have risen rapidly.

Approve 20 cities including Beijing as demonstration cities for software outsourcing services with preferential policies. In February 2009, the State Council approved 20 cities including Beijing as demonstration cities for software outsourcing services, and implemented a series of encouragement and support measures in 20 pilot cities to accelerate the development of China's service outsourcing industry.

Industry informatization has been launched, with high prosperity. Since the first half of 2009, China's medical informationization HIS, power informationization SG168, telecommunications 3G investment, and financial IT construction have entered a period of strong investment.

The performance turning point will arrive six months after the turning point of China's GDP. In the third quarter of 2009, the computer industry experienced a turning point in performance, with revenue returning to growth and lagging behind China's GDP turning point by six months.