Generally, Chinese executives remain less "visionary" compared to their Western counterparts in terms of adopting new technologies to improve management and production efficiency, said Thomas Lam, vice-president of Cisco Systems Asia-Pacific.
Most Chinese executives still think "it's more important to build a building than a network," Lam told China Daily on the sidelines of Cisco China's fiscal year 2006 Partner Summit.
Despite the high growth of the whole IT market, "IT spending by single Chinese companies remains small," he said.
Citing Cisco's recently secured deal with JP Morgan worth US$167 million, Lam said the value of most single orders from Chinese customers remained small, reflecting that they are not bold enough to invest in the future.
"What remains in their minds is 'what to see, what to get.' Chinese executives have yet to fully realize the benefits of the adoption of communications technologies to spur future business growth," Lam said.
There is a heightened need for Chinese companies to beef up IT spending to cope with intensifying competition both at home and abroad, he noted.
Huang Yong, executive president of Beijing-based CCID Consulting, forecast China's IT market would grow 15.7 per cent this year, compared to average annual growth of 16.4 per cent in the past four years.
Chinese companies are still focusing too much on hardware spending, he noted. Hardware spending is forecast to account for 62.7 per cent of the total IT spending this year compared to 39.2 per cent in 2004.
Such a composition is "very unreasonable," said Huang.
Most Chinese executives still think IT spending is just about buying computers and simply getting them networked. They are not paying enough attention to software, services or applications.
Yet, the adoption of advanced technologies is starting to pick up steam.
According to Jia Bin-Duh, vice-president of Cisco Systems, Cisco China's revenues generated from advanced technologies increased more than 50 per cent last year.
Such technologies include security solutions, IP telephony, wireless LAN, storage, optical and home networking.
Cisco is adopting a strategy billed as "rattle and hum" to spur the market.
By that, Cisco means it wants its partners to focus more on solution-based sales and advanced technologies instead of just selling Cisco's core routers and switch products.
According to Raymond Lau, vice-president of Cisco China, 100 per cent of its sales in China come from the tie-ups with its partners.
Lau said Cisco China will introduce a number of incentives to its partners to spur the adoption of advanced technologies among Chinese customers in the fiscal year 2006 starting on August 1.
Those partners which find new business opportunities or focus on solution-based sales will reap generous rewards from Cisco, said Lau.
"The Chinese market is becoming increasingly mature and the demand for integrated solutions is on the rise," he said.
Partners are already playing a major role in helping Cisco generate revenue from advanced technologies.
Business opportunities come from transformation of business models, said Duh.
"Around the world, real-time companies are winning," he said.
"Real-time and intelligent information networks mean unlimited business opportunities."
The potential of China's market seems promising for technology vendors.
Huang said China's IT market will maintain an annual average growth of 16.8 per cent in the coming three years.