Software - China

China

Revenue in the Software market is projected to reach US$39.88bn in 2024.
Enterprise Software dominates the market with a projected market volume of US$16.98bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 11.31%, resulting in a market volume of US$61.23bn by 2028.
In global comparison, most revenue will be generated in the United States (US$353.50bn in 2024).

Key regions: United States, Canada, Germany, China, Japan

Definition:

In general, software is defined as a set of instructions written as programming code to execute specific tasks on a computing device. The Software market covers a wide range of software products and solutions that are publicly sold by various companies. Most software solutions in this market are designed for professional use, but some can also be suitable for personal use. They can also range from basic productivity tools such as word processors and spreadsheets to complex software solutions such as project management tools, graphic design software, and enterprise resource planning software.

Products in the Software market can be obtained in two ways: as on-premises software that is sold via a transactional license or a subscription and as cloud-based software (software as a service/ SaaS) that is most frequently sold as a subscription.

Structure:

The market contains four markets that are based on the functionality of the software:

Productivity Software refers to application software that supports activities such as producing documents, spreadsheets, drawings, and presentations. This market includes Administrative Software, Collaboration Software, Office Software, Creative Software, and Construction and Design Software.
Enterprise Software refers to all software that supports essential large-scale business activities such as enterprise resource management, customer management, and supply chain activities. This market includes Enterprise Resource Planning Software, Customer Relationship Management Software, Business Intelligence Software, Supply Chain Management Software, Content Management Software, and Other Enterprise Software.
Application Development Software refers to software and tools that help the overall application development process.
System Infrastructure Software refers to software that provides the base framework for operating and managing organizational processes and services on hardware devices.

Additional Information:

The Software market comprises revenue and revenue change as the key performance indicators. Only revenues that are generated by primary vendors at the manufacturer price level either directly or through distribution channels (excluding value-added tax) are included, and revenues generated by resellers are excluded. Revenues are generated through both online and offline sales channels and include spending by consumers (B2C), enterprises (B2B) as well as governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed.

Key players in this market include Microsoft, Adobe, SAP, Oracle, and Salesforce.

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Analyst Opinion

China has become a global powerhouse in the technology industry, with a booming software market that has been rapidly growing in recent years. The country's software market is unique in several ways, with customer preferences and local special circumstances driving the trends in the market.

Customer preferences: Chinese customers are increasingly demanding high-quality software that is both reliable and user-friendly. This has led to a surge in demand for software that is tailored to the Chinese market, including social media platforms, e-commerce applications, and mobile payment systems. Additionally, Chinese customers are highly price-sensitive and are often willing to switch to cheaper alternatives if they feel that the quality of the software is not up to par.

Trends in the market: One of the most significant trends in the Chinese software market is the rise of artificial intelligence (AI) and machine learning. Chinese companies are investing heavily in AI technology, with the Chinese government providing significant support in this area. This has led to the development of a wide range of innovative AI-powered software applications, from chatbots and virtual assistants to autonomous vehicles and facial recognition systems.Another trend in the Chinese software market is the increasing focus on cloud computing. As more and more Chinese companies move their operations online, the demand for cloud-based software solutions has skyrocketed. This has led to the emergence of several major players in the Chinese cloud computing market, including Alibaba Cloud, Tencent Cloud, and Huawei Cloud.

Local special circumstances: One of the unique aspects of the Chinese software market is the government's role in regulating the industry. The Chinese government has implemented several policies aimed at promoting the development of the domestic software industry, including tax incentives, subsidies, and preferential treatment for Chinese companies. Additionally, the government has implemented strict regulations on foreign software companies operating in China, which has led to the emergence of several homegrown Chinese software companies that dominate the domestic market.

Underlying macroeconomic factors: China's rapid economic growth in recent years has been a major driver of the country's software market. As the Chinese middle class has grown, so too has the demand for high-quality software solutions that can meet the needs of this increasingly tech-savvy population. Additionally, China's large and rapidly growing population has made it an attractive market for software companies looking to expand their reach. Finally, the Chinese government's focus on promoting innovation and technological development has created a favorable environment for the growth of the software industry.

Methodology

Data coverage:

The data encompasses B2B, B2G, and B2C enterprises, except for the Enterprise Software segment, in which consumer (B2C) spending is not considered. Figures are based on the allocation to the country where the money was spent at manufacturer price level (excluding VAT).

Modeling approach / Market size:

Market sizes are determined through a top-down approach with a bottom-up validation, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and reports from our primary research. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, level of digitization, GDP sector composition, and observed level of software piracy. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. The main drivers are the GDP and the level of digitization.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic is considered at a country-specific level.