Asia/Pacific (Excluding Japan) manufacturing IT spending will grow at a CAGR of 11.4%
Jul 05, 2005
According to a new report from Manufacturing Insights, an IDC Company, the Asia/Pacific excluding Japan (APEJ) manufacturing IT market (consisting of both discrete and process manufacturing sub-industries) was valued at US$13.7 billion in 2004 and is expected to grow steadily at a CAGR of 11.4% to reach US$21 billion by 2008. According to the report, Asia/Pacific (Excluding Japan) Manufacturing IT Spending 2005-2008 Forecast (Document #AP664103M), the discrete manufacturing segment accounted for 78.6% at the end of 2004, while the process manufacturing segment made up the rest of the US$13.7 billion manufacturing IT spending pie in the APEJ region. Many manufacturers in the APEJ region continue to invest in IT to gain operational efficiencies to better contain rising business costs due to stiffer competition and complexities introduced by globalization and liberalization of markets.
"After a relatively good year for the APEJ manufacturing sector in 2004 - with positive GDP growth and industrial production in countries including Singapore, Malaysia, Thailand, South Korea, Taiwan, and China - the sector is expected to moderate in 2005 due in part to softer global demands," says Ng Buck Seng, associate director, Manufacturing Research at Manufacturing Insights Asia/Pacific. "Moving ahead, the rising economies of China and India will continue to spur growth in the regional manufacturing sector," he adds.
Key takeaways of the study include:
-- As more manufacturers (both local and foreign) set up production bases in China to take advantage of its lower wage labor supply and to go after the huge domestic market, they will need to spend on key IT infrastructure, applications, and services to get their operations off to a smooth and robust head start. This will continue to drive manufacturing IT spending in both the host country and the country of origin in the case of overseas manufacturers.
-- Together with higher infrastructure spending, many manufacturers in emerging large markets such as China and India will continue to invest in enterprise resource management (ERM) and business intelligence (BI) solutions to provide the basic platforms for better internal collaboration and decision-making.
-- Most manufacturers in more mature markets such as Korea, Taiwan, Singapore, and Australia, as well as those in the emerging markets of China, India, and Southeast Asia that had managed to more or less put their internal house in order, will look to build on their past investments in IT. These organizations will want to leverage on their investments in ERM transactional platforms to gain competitive advantage at their value chain level. This will drive IT spending in collaborative applications and e-business solutions around their product development chain, customer chain, as well as supply chain.
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