24 Jan 2012

B2B IT Innovation in China

A gap in China’s B2B IT development could present IT consultants or developers with opportunity – if they can negotiate the hurdles.

The Chinese B2B software market is fragmented, with competition driven by cost rather than quality. The majority of enterprises, outside state-owned or multinationals, have low levels of IT knowledge. Businesses prefer simple rather than innovative software and see little value in IT other than as a passive reporting tool.

These attitudes have helped to stifle innovation and growth in the domestic B2B software industry which is still in the early stages of development.

This is in stark contrast to China’s successful mobile and internet software development scene driven by consumer demand.

Among factors which inhibit a swift change in business attitudes are governance – dominant CEOs disempower senior management, including undervalued chief information officers – a strong focus on cash which discourages an IT investment approach, and government regulation. Uncertainty and risk around the government incentive planning cycle leads businesses intentionally to diversify to spread risk or seize short-term growth opportunities.

The resulting lack of strategic focus limits the value gained from IT systems and discourages long-term investment.

Taken from an ICAEW-led panel discussion at the International Conference on Information Systems in Shanghai, China in December 2012.


Julia Irvine