IT companies are flocking to China, which is considered by many to be the biggest growth
market in the world today. IBM , Cisco
and Motorola are just a few of the large multinational
companies that have been trying to boost their presence in the most populous
country on the planet.
With the Chinese government easing its restrictions on imported hardware and
software, like the deal struck between the United States and China to end Value Added Taxes
on imported integrated circuits in July, it’s getting easier
for companies on the outside to conduct business inside China.
Another company looking to do more business in China is Unisys , a one-time mainframe company that in recent years has expanded
its portfolio to become a services provider, providing consultation, systems
integration and business process outsourcing assistance to companies
throughout the world.
David Fu assumed control of Unisys’ Greater China operations in September as vice
president and general manager. Fu, who in the past has worked in other
multinational firms with operations in China, such as AT&T ,
Bank of America and Equant Network Services, talked to
internetnews.com about the role Unisys — and other firms — need to
play in coming years to be successful in China.
Q: Just how much growth potential do IT companies in China expect?
I certainly think that China is considered to be one of the highest-growth
areas for the IT industry. If you look at research from [research firm]
IDC, in 2004 the overall spending for IT is about $30 billion. But if you
look into the next few years, the projected growth, the [Compound Annual
Growth Rate] is usually double digit. I think for the next few years, it’s
going to be 15 percent overall, with $44 billion to $60 billion in 2007.
So you really are seeing tremendous growth in the IT industry. But if you
look into the details, then I would say that services is going to be the
leading factor in the IT industry, while the hardware and software will be
growing relatively slower compared with the professional services —
outsourcing and infrastructure services.
Q: Why services and not hardware or software? Is the infrastructure already
there?
You’ve probably seen the tremendous growth of IT investment in hardware and
software in China. While they are building up the infrastructure, they have
a need for the systems to support the process requirements to support the
business requirements. But throughout the years, they’ve bought the hardware
and software. They now begin to realize the importance of matching the
goals of the business and the IT and there’s where you see the services
becoming more important and leveraging the existing investment. Bettering its
uses to get a better return is a big priority in China right now.
Q: Enter Unisys, I presume?
Yes, that’s why I feel very confident that Unisys is able to play a major
role in the IT services business in China in the next few years.
Q: There are other services providers in China like IBM and EDS. What does
Unisys provide that the others don’t?
Well, China’s a big market; there’s room for everyone to play. The
important strategy is to put in the right focus to be able to
concentrate on the right markets, and I think Unisys certainly has strong
footing in services — coupled with our company’s enabling technologies —
that we can really expend in China.
Unisys has been in China for more than
20 years, and was one of the earliest IT technology companies from the U.S. to
operate in China. IBM, HP and the others — they all have operated in China
for years, too.
Q: Unisys ties to Microsoft, and use of its Windows technology is well-known,
yet many Chinese organizations are settling with Linux.
Linux is certainly an important initiative that China is moving towards. We
also see some associations and vendors moving to a Linux environment. I’ve
also seen Microsoft operating in China for many years — I would say the most
respectable software provider — and I do feel that Unisys is taking the right
approach of teaming up with Microsoft globally.
But we are also very focused
on our technology based on Linux. We have our ES7000 server, which can also
run on Linux, and we are really there to support the growth of both
technologies.
Q: What do western companies need to do to succeed in China?
If you look at the business development, I feel [companies] will have to put
in the commitment to really make it work. First is the opening of the
market; most of the multinational companies — whether it’s from the U.S.,
Europe, Japanese or other Asian-based agencies — are now operating in
China. They are heavily invested there. No company can ignore
China; whether you operate in China or not, you need to have a China
strategy.
It’s also important to support the Chinese enterprises, which are
also moving outside China, who are looking at business and growth and
looking for ways of transforming themselves into world-class companies. I
mentioned before there was a lot of investment in hardware and software. Now
is the time for them to leverage their existing investment in order to focus
on services. They are the ones I see that have tremendous opportunities for
Unisys to support — the Chinese company who wants to compete with the
agencies who compete inside China or are moving outside China — and this is
really the focus.
