IDC’s Top 10 Predictions on China’s ICT Market In 2022

By Joe Zhang

In 2021， the impact of the global epidemic has diminished but still continues. Countries， regions and enterprises have worked out a set of measures to deal with the epidemic. As a result， the global and Chinese economy is recovering. According to the forecast of the EIU and IDC， global GDP will grow by about 5.6% in 2021， while China’s GDP will grow by about 8%. As 2021 draws to a close， it’s time to prepare for 2022. How is the economy growing in 2022？ What are the changes in the market environment？ What are the growth trends of the digital economy？ Which digital technologies have greater application potential？ How will the digital transformation of industry users and the competitive landscape change？

Kitty Fok， President of IDC China， said that in 2021， all the enterprises will experience unprecedented waves—downwind， headwind and crosswind. The downwind includes： strong consumer demand for digitalization， excellent digital infrastructure， accelerated digital innovation from enterprises and governments’ big stimulus programs. The headwind includes an ongoing pandemic， a shortage of digital skills， continuing strains in global supply chains and rising geopolitical risks. The crosswind includes： stakeholders’ changing expectations， new demands for privacy protection from digital sovereignty， increased cybersecurity risks as well as continued disruption and restructuring of ecosystems. These waves will affect 2022 and beyond， and all companies have to develop new digital-first strategies to capitalize on and adapt to these changes， and continue to build core competencies in a bid to achieve further innovation and growth. Enterprises’ digitalization priority strategy will vary based on different industry characteristics， digitalization level and business objectives. However， in general， enterprises need to consider digitalization priorities in 9 aspects in the next two years： wireless connectivity， personalized customer， digital twin， edge data， domain intelligence， hybrid work， security and privacy， remote operation and software innovation.

Regarding the current factors affecting the Chinese ICT market， Wu Lianfeng， Vice President and Chief Analyst of IDC China， stressed that the 14th Five-year Plan is the cornerstone of the development trend of China’s ICT market and its six key words are also the basis for the top 10 predictions on China’s ICT market in 2022. The six key words are： new science and technology—strengthening the national strategic science and technology force， new industry—accelerating the development of modern industrial system， new pattern—building a double cycle of new development pattern， new economy—accelerating digital development and construction， new region—in-depth implementation of regional development strategy and new environment—accelerating green transformation of development mode.

According to IDC’s latest forecast， the size of China’s ICT market （including third platform and innovation accelerator technology） will reach USD 793.7 billion in 2022， up 9.2% from 2021 and consistently outpacing the GDP growth. Digital transformation spending will reach USD 329.1 billion in 2022， up 18.6% from 2021 and digital transformation remains a core strategy of enterprises.

Prediction 1： the industry indepth digitization accelerates with promising opportunities for digital products and services

The 14th Five-Year Plan clearly states： promote the deep integration of digital technology and the real economy， accelerate the digital transformation of industries and quicken the pace of building a digital society. “New infrastructure”， the cornerstone of the digital economy， is spending about RMB 2 trillion each year. IDC predicts that by 2022 more than 50% of China’s economy will be built on or affected by digitization. By 2023， a third of companies will generate more than 30% of their revenues from digital products and services， while such companies occupied a proportion of less than a fifth in 2020.

Prediction 2： cloud market patterns are changing and edge exclusive industry shows cloud distribution

In 2020， the market share of China’s top 10 public cloud manufacturers reached 91%， an increase of 5% compared with 2018. However， due to customer demand and policy guidance， trends such as edge cloud， exclusive cloud， industry cloud and multi-cloud deployment drive the distribution of cloud market. The growth of head cloud manufacturers is slowing down， while the growth of upstarts is rapid. The IDC predicts that by 2023， 40% of China’s top 1，000 enterprises will reset their cloud selection process to focus on business results rather than needs， evaluate the portfolio of cloud service providers from device to edge and from data to ecology to seek to accelerate innovation while meeting policy requirement.

Prediction 3： enterprises’intelligence concept rises with value highlights of intelligent prediction and smart decisions

Artificial intelligence is one of the seven key fields of digital industrialization in the 14th Five-Year Plan and intelligent transformation is also the focus of stateowned enterprises in the next three years. In order to give better play to the value of AI， the idea of Enterprise Intelligence emerged. The IDC defines enterprise intelligence as an organization’s ability to learn and synthesize information to continuously learn and apply in a powerful data culture and generate scale-up insights that enable organizations to improve business results. The IDC predicts that by 2025， more than 60% of enterprises will combine human expertise with artificial intelligence， machine learning， NLP and pattern recognition to make intelligent predictions and decisions， enhancing enterprises’ entire foresight and increasing employees’ productivity and productivity by 25%. To achieve these performance， it will also be imperative to set up a proprietary CXO for coordinating the business with the AI.

Prediction 4： Diversified interactions reshape user experience and the concept of the meta-universe continues to ferment

User experience innovation has always been one of the core goals of digital transformation， and the epidemic has accelerated the application of various new technologies and terminals， such as virtual pavilions， AI digital people， 5G intelligent video customer service and AR/VR terminals. The IDC predicts that by 2023， 50% of China’s top 1，000 enterprises will shift half of their spending on new technology hardware and connectivity in order to reshape user experience， and those organizations that can provide excellent digital experiences for work， learning， entertainment， health and space will have a long-term advantage in acquiring and retaining customer loyalty. The IDC defines “meta-universes” as open virtual world that is parallel to the real world and provides immersive experiences like gaming， shopping， socializing and learning. The development of metauniverses is still in the very early stages， and this concept will continue to grow in 2022 with AR/VR shipments growing rapidly.

Prediction 5： the value of network connectivity is further demonstrated and the deployment of 5G application scenarios is accelerated

The epidemic has made telecommuting a new normal for some of the company’s employees， and the remote operation and maintenance of manufacturing enterprises is also a must. Online meetings and activities are indispensable， live video marketing has become an important channel， and fast， stable and secure network connection has never been so important as now. The IDC predicts that by 2022， more than 40% of the organizations will prioritize the resiliency of network connectivity to ensure business continuity and the development of new application scenarios， resulting in uninterrupted digital interaction and superior experiences for customers， employees and partners， which will also drive accelerated deployment of 5G application scenarios. The IDC also predicts that by 2023， 30% of China’s top 1，000 enterprises will also first develop new processes as remote operations， while the number of remote operations in 2020 was very limited.

Prediction 6： Digital twin penetrates and organizations start to build virtual new infrastructure

The concept of digital twins has been proposed for more than 10 years， but its in-depth application is still few. However， with the extensive application and maturity of technologies such as the Internet of Things， industrial Internet， big data， AI， 5G and cloud computing， the application of digital twin has begun to enter into the fast track. The IDC predicts that from 2021 to 2027， the number of physical assets and processes modeled for digital twins will increase from 5% to 50%， resulting in optimized operational performance that will not only reduce operating costs， but also accelerate transformation and innovation. By 2025， 30% of the cities will realize physical and digital combination through the Internet of Things， artificial intelligence and digital twins， and improve remote management of critical infrastructure and digital services.

Prediction 7： “as a service”delivery will popularize and enterprises’ IT budgets will be reallocated

Business model innovation is one of the core values of digital transformation， and the service orientation of soft and hard products is the most important measure， which can increase the stickiness of users and maintain stable growth of service providers. For service users， capital expenditure can be greatly reduced. The era of “everything as a service” is coming， especially in the ICT market. The IDC predicts that 40% of the large enterprises’ IT budgets will be reallocated by 2024 due to the adoption of integrated “as a service”bundles in security， cloud platforms， virtual workspaces and connectivity. While the advantages of faster implementation cycles， more agile deployments and alignment with business usage are well recognized， the IT teams still need to constantly monitor inflation risk of the portfolio. In the domain of personal computer， IDC predicts that one fifth of the enterprises’personal computers will be deployed through device as a Service agreements by 2023， and this share will continue to rise throughout the forecast period.

Prediction 8： digital ecosystem continues to rebuild and industrial Internet is likely to make profit

In the digital world， the strength of an API-based ecosystem determines the strength of the enterprise’s core competitiveness. Internet companies and ICT technology service providers are strengthening their own ecosystems， and the large industry users are making use of digital technologies and looking for new partners to build their own digital ecosystems through their industry advantages. The Ministry of Industry and Information Technology evaluated 15 industrial Internet double crossplatform and each has the ambition to establish a new ecology through their own platform in the huge industrial Internet market to obtain a greater market share. The IDC predicts that by 2026， the top 1，000 companies in China will derive an average of 30% of their revenue from the industry ecosystem with partners through such initiatives as data sharing， shared applications and shared operations. 50% of the CIOs will also treat the ability to collaboratively leverage industry ecosystems as an important source of their innovation， data sharing， differentiation and cybersecurity risk management.

Prediction 9： data protection and privacy faces huge challenges， and data governance and security becomes imperative

The Regulations on the Security Protection of Critical Information Infrastructure and the Law on Data Security took effect on September 1st， 2021， while the Law on the Protection of Personal Information will take effect since November 1st， 2021. Compared with similar laws in foreign countries， China’s three laws are stricter with more innovations， higher fines as well as clear and strict restrictions on user rights， exit assessments and data sharing， which poses a huge challenge for all businesses. The IDC predicts that by 2024， data privacy， security， placement， usage and disclosure requirements will force 80% of the large Chinese companies to restructure their data governance processes on an autonomous basis. Successful organizations will leverage digital sovereignty as an important driver for new investments in resource/ data control and work to mitigate trust risks in areas such as cybersecurity， while providing the foundation for new customer experiences， employee experiences and remote operational efforts. In this trend， data governance， zero trust and privacy computing as well as cloud and edge security have become urgent needs of enterprises.

Prediction 10： Dual carbon and ESG is the new agenda and technology inclusion tests corporate social responsibility

The 14th Five-year Plan clearly states that China should strengthen environmental protection， develop the green economy， achieve its carbon peak by 2030 and be carbon neutral by 2060 to better support innovative， coordinated， green， open and shared development. This puts forward new requirements for all enterprises， especially largescale enterprises， on higher requires of environment， sustainable development and governance. How to use digital technology to achieve dual carbon and ESG goals begins to test the social responsibility of enterprises？ The IDC predicts that 50% of China’s top 1，000 companies will strictly set environmental sustainability parameters in their business KPIs by 2023. 50% of China’s Top 1，000 companies will need CIOs to implement sustainable information technology， incorporating environmental， social and governance practice into the technology lifecycle from procurement to disposal.