The total revenue of the top 100 Chinese electronics and information technology (IT) manufacturers in 2005 hit 964.3 billion yuan (US$120.5 billion), representing a year-on-year increase of 18.2 percent.

 

That was according to statistics released by the Ministry of Information Industry (MII) yesterday.

 

Deputy MII chief Lou Qinjian said the domestic electronics and IT sector is maintaining momentum with major players' competitiveness improving significantly.

 

The top 100 players last year had 93,600 people working on research and development (R&D) activities, accounting for 9.6 percent of their total employees.

 

The annual R&D spending of the top 100 last year was 3.56 billion yuan (US$445 million), accounting for 3.7 percent of total revenue, compared to the industry average of 2.1 percent.

 

Legend Holdings Ltd, parent of PC maker Lenovo Group, was the No 1 player with annual revenue of 108.2 billion yuan (US$13.5 billion) in 2005. Next came home appliance manufacturer Haier Group and BOE Technology, the country's top LCD (liquid crystal display) panel maker.

 

TV and mobile phone maker TCL Group and telecoms equipment maker Huawei Technologies were ranked No 4 and No 5.

 

A key indication of increasing competitiveness in the sector is that top players are aggressively expanding global operations through overseas mergers and acquisitions (M&As), Lou said.

 

Lenovo last year acquired IBM's PC-making business for US$1.25 billion, making it the world's third-largest maker of PCs.

 

In 2003 BOE bought Hynix Semiconductor's flat-screen display unit, the world's ninth-largest LCD maker, for US$380 million.

 

It also bought 26 percent of TPV Technology, the world's No 2 maker of monitors, for HK$1.05 billion (US$131 million).

 

TCL Corp and France-based Thomson SA in 2004 merged their television businesses, creating the world's top TV maker.

 

And TCL's communications unit launched a venture with Alcatel to make and sell mobile phones.

 

"Such acquisitions have enabled domestic companies to increase the number of patents they owned, which is crucial for the expansion of their global operations," Lou said.

 

TCL secured more than 34,000 TV-related patents after acquiring Thomson's TV business, according to Wang Kangping, vice-president of TCL Group.

 

In 2005, TCL's overseas sales exceeded its domestic turnover for the first time.

 

However, a worrying sign is that the profit margins of the top 100 players are still falling.

 

In 2005, the average profit margin hit 2.5 percent, a five-year low. The figure for 2004 was 3.3 percent.

 

The top 100 players contributed one quarter of the total revenue of the whole industry and 20 percent of the total profit last year.

 

In 2005, Huawei earned the largest net profit, 5.15 billion yuan (US$643.7 million), among the 100 companies.

 

Lou called for domestic electronics and IT firms to redouble their efforts in innovation, especially in setting technology standards, to improve competitiveness.

 

He forecast China's electronics and IT market will hit 7 trillion yuan (US$870 billion) per year by 2010.

 

Last year, the market was worth 3.84 trillion yuan (US$480 billion), a 28.4 percent year-on-year increase compared to the previous year.

 

(China Daily June 1, 2006)