China overtakes Japan as No 2 PC market

China overtook Japan as the world's second-biggest market for personal computers last year after Japan's PC sales shrank by a hefty 11 per cent, the largest year-on-year fall on record.As Japan's economy struggles, businesses and consumers are putting off investments in information technology and purchases of new computers, while China's information-technology market is enjoying accelerated growth. The Japan Electronics and Information Technology Industries Association (JEITA), a group of 17 PC makers, said Japan's domestic PC shipments fell 6 per cent year-on-year to 2.38 million units in the October-December quarter. As a result, Japan's 2002 shipments totalled 10 million units, down 11 per cent both in terms of the number of shipments and in value. It was the second year in a row they have fallen. The group said the calendar 2002 figures put Japan behind China, where domestic PC sales are expected to have topped 10.8 million during the year, still far behind the United States' 47.8 million units. "Japan's info-tech market has been locked in a negative spiral," Masatsugu Shinozaki, who heads JEITA's PC research group, told a news conference. "Businesses' investments lack strength in the economic doldrums, while falling wages are affecting consumer spending," he said. Research company International Data Corp said last week that despite the cloud hanging over the economy, US PC shipments in the October-December quarter rose 6.6 per cent to 12.94 million units, helping to push up calendar 2002 sales by 3.9 per cent. JEITA said it expected government tax incentives and economic packages to help push up Japan's PC sales by 5 per cent in 2003 to 10.5 million units. "The prediction is also based on an expected spread of broadband and other infrastructure, increasing replacement demand for business-use PCs, a rising number of senior and beginner consumer users and so on," Mr Shinozaki said. Since hitting a peak at 12.1 million units in the year to March 2001, Japan's domestic PC sales have been on a downward trend, hit by sluggish consumer spending and restrained corporate investment in information technology. The group last October revised down its domestic shipment target for the business year to March to slightly above 10 million units from the 11.1 million forecast in April. Japan's major PC makers, such as NEC, Fujitsu and Sony, saw their shipments to the Japanese market fall during the April-September first half of this business year. That contrasted with global leader Dell Computer Corp, which scored a 47.2 per cent year-on-year rise in its PC shipments in Japan through aggressive pricing and execution of its direct business model. Japan's top maker, NEC, held a 25 per cent share of Japan's shrinking PC market in the first half, followed by Fujitsu's 20.6 per cent, industry researcher Multimedia Research Institute said.