China's electronic information industry has demonstrated a downward trend with the spreading of the international financial crisis. According to statistics released by the Ministry of Industry and Information Technology (MIIT), China's large electronic information manufacturing enterprises showed a fall in the growth in operating revenue, export and profits in the first two months of this year, while growth of revenue of the software industry slowed down sharply.

The industry has reported a fall in growth for four months running as starting from November last year, and the downward trend has started to deteriorate further.

The country's large electronics information manufacturing enterprises reported 13.3 percentage points decline in sales value in January-February, 26.1 percentage points steeper than the end of last year, and 12.1 percentage points lower than the -1.2% average growth of the national industry in the same period. The growth in February was down 3.7 percentage points. The growth of added value in the first two months dropped 9.4% year on year, 13.2 percentage points lower than the 3.8% of the national industry.

The downturn of the industry is mainly attributed to the sharp drop of export. In the first two months of this year, large electronic and information product manufacturing enterprises made delivery value for export amounting to RMB347.19 billion, down 19.2% year on year, with the proportion in the total income of the industry down 4.7 percentage points from the 63.7% in the same period last year. February registered 12.8% drop year on year, and the three sectors of electronic computer, electronic components and electronic devices presented a drop of 13%, 17.9% and 15% in the month respectively. The decline of export led to a fall of 12.2 percentage points in sales value of the industry, accounting for 91.8% of the drop of the whole industry.

Economic efficiency declined sharply. Large electronic and information product manufacturing enterprises realized profits of RMB3.23 billion in January-February, plunging 85.7% year on year. The communications equipment sector suffered losses of RMB640 million of which the exchange equipment sector incurred losses of RMB2.77 billion as compared with the RMB1.2 billion profits in the same period last year. The electronic components sector made losses of RMB1.87 billion, of which the integrated circuit, opto-electronics, and vacuum device sectors made losses of RMB1.27 billion, RMB480 million and RMB540 million respectively. Profits of computer and electronic components dropped as much as 58.5% and 90.2% respectively.

Various sectors of the industry showed negative growth, with the electronic device and component sectors showing the steepest decline rates. Sales value of the electronic device and electronic component sectors dropped 20.4% and 18.7% in January-February, which were 7.1 percentage points and 5.4 percentage points higher than the average drop of the industry, respectively, presenting the fastest freefall among various sectors, with the proportion in the whole industry down 1.1 percentage points from the same period last year. The whole machine sector also declined in the period. The sales value of computer, and household video and audio system sectors dropped 14.5% and 15.7% respectively, and their export went down 18.7% and 20.4% year on year.

Growth of the software industry slowed down remarkably. The software industry realized operating revenue amounting to RMB126.08 billion in the first two months, rising 20.8% year on year, down 7.9 percentage points from the same period last year. The income from software products reached RMB46.3 billion, up 23.7%; income from software technology service, RMB26.2 billion up 23.8%, of which the income from outsourcing service surged 39.3%; income from imbedded software, RMB20.3 billion up 13.8%, the increase 23.5 percentage points lower than the same period of last year.  System integration income reached RMB29.4 billion, up 19.3% and IC design RMB3.9 billion up 15.6%

The output of major products declined. From January to February, the industry turned out 79.672 million mobile phones, down 11.2% year on year; micro computer, 19.029 million, down 4.3%; LCD, 2.659 million, down 15.8%; and digital camera, 7.868 million, down 20.2%.

Domestic and foreign capital companies performed differently. In the first two months, foreign-funded manufacturing companies realized sales value of RMB441.56 billion, down 18.1% year on year, which was 4.8 percentage points lower than the average growth of the manufacturing industry and the growth in February dropped 9.2% year on year. Domestic enterprises registered a 5.9% increase in the period, 19.2 percentage points higher than the average growth of the manufacturing industry, and the growth in February jumped 19.2% year on year. Sales value of companies with limited liabilities and private companies increased 10.6% and 8.8% respectively, which were 23.9 percentage points and 22.1 percentage points higher than the average growth of the manufacturing industry.    

Tong Tong