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China's Technology Companies Achieve Over 1,000% Growth

Updated Beijing Time

Substantial increases in revenue indicates TMT industry will continue to thrive

Guangzhou, 25 October 2007 – Deloitte today announced the results of the Deloitte Technology Fast 50 China 2007 Program at a ceremony in Shanghai. The 50 winning companies achieved a three-year average revenue growth of 1,349% while the top five winning companies grew by 9,668% on average over the past three years, a significantly higher rate of growth than 2,910% in the previous year.

One of the characteristics of this year's Technology Fast 50 China program is the emergence of the new energy sector comprising 8% of the 50 winning companies - the top winner, Trinar Solar Limited, comes from the new energy sector. There are signs China's TMT industry will continue to develop towards sectoral diversity as reflected by the distribution of the top 50 winning companies which come from a diversity of industry sectors such as software, communications/network, semiconductor and new energy.

The five fastest growing companies from industries including new energy, communications/network and internet, achieved outstanding three-year average revenue growth ranging from 2,734% to 27,542%. This is a significant increase from the growth rate of last year, indicating the TMT industry will continue to enjoy remarkable growth. The geographical distribution of the 50 winning companies covers 12 cities/regions in China with over half of them located in Beijing and Shanghai, demonstrating the two cities' dominance of high growth hi-tech companies.

Mr. Charles Yen, China National Leader of Deloitte’s TMT Group, said, “We are confident of the long-term growth of Chinese hi-tech companies given China's rapid economic growth, the strong development of the TMT industry, the government advocating technology innovation and the appetite of local and overseas venture capital for fast growing tech companies. This is in line with the findings of our CEO survey of the Technology Fast 50 companies showing the positive outlook of CEOs who are confident of achieving continuous high growth in the next 12 months.”

There is a higher proportion of companies from the software sector which contributed 30% of winning companies. The communications/network, internet and semi-conductor sectors comprised 16%, 8% and 6% respectively, a decline from 26%, 14% and 12% last year, while the biotech/ pharmaceutical and medical devices sectors each made up 4%.

The overall winner, Trina Solar Limited, recorded 27,542% three-year average revenue growth. The company primarily engages in the manufacturing of monocrystal rod, silicon wafer, PV module, PV power station and inverter. The company has enjoyed significant growth since its inception in 1998 and was listed on the New York Stock Exchange in 2006.

Beijing Kaitone Information Technology Limited came second with three-year average revenue growth of 9,408%. The company carries the brand mobilmedia.cn which outshines competitors with its innovative business ideas and unique technological advantages, to be the pioneer in small community SMS service.

Third place was taken by Shanghai Everstar Online Entertainment Co., Ltd (www.9you.com) with a 4,510% three-year average revenue growth. This is an integrated online games portal providing various online games services including online games information, global web search and AVATAR services.

Following closely in fourth place was Shanghai Winking Entertainment Ltd with three-year average revenue growth of 4,145%. It focuses on developing high quality multi-platform games with a host of large-scale RPG online games including www.tfyt.com.cn which is well-recognised in the marketplace.

The 9 Limited from Shanghai took fifth position with 2,734% three-year revenue growth on average. The company is a repeat winner and came third last year with a similar growth rate. It is one of the biggest network game developers and operators in China dedicated to the "Ninth Art" – the art of online games providing brand new online entertainment experience for its netizens.

To understand the top-of-mind issues and concerns of the winning companies CEOs and their future outlook, a survey was conducted as part of the Technology Fast 50 China program. Key findings of the CEO survey are as follows:

Key success factors and challenges

• The ability to attract and retain talent (40%), to develop and enhance products that can meet the changing customer needs (38%) and the competitiveness of the market (16%) where the company belongs were considered by the CEOs as the three key factors to successfully drive growth for a company.
• Being responsive to the fast-changing market environment (45%) was considered by the CEOs as the greatest challenge for operations.
• 39% of CEOs regarded optimizing financial structures as the most significant financial challenge.

Cultivating talent crucial to success

• To find, employ and retain qualified employees (36%) is the second greatest operational challenge that CEOs face and in response they focus on hiring overseas talent to help grow companies.
• Most CEOs believed they will use equity/benefit share plans (70%), career growth plans (64%), training and development plans (61%) and a competitive remuneration package (58%) to help attract and retain talent.

Growth prospects

• The CEOs have an optimistic outlook and all of them are confident of continuous rapid growth in the next 12 months.
• In addition to revenue growth, CEOs are confident of headcount growth with all of them anticipating expanding their workforce in the next 12 months - 58% expect to achieve organic growth, 30% through public offerings, and 6% by acquiring other companies and cooperating with a strategic partner.
• 36% of the CEOs thought increasing labour costs and the shortage of a skilled workforce will slow growth, while 28% said excessive government controls and insufficient official supervision will also restrict the rapid growth of companies.
• The continuing globalization trend encourages more companies to look offshore and 55% of CEOs anticipate a 15% increase in their headcount dedicated to the offshoring business. There was a decline from 21% to 9% of companies that do not have headcount dedicated to offshore operations.

The Deloitte Technology Fast 50 China program ranks leading companies in Technology, Media and Telecom sectors based on their average revenue growth rates over the last three years. Along with its counterparts in Australia, India, Japan, Korea and New Zealand, the Deloitte Technology Fast 50 China is a key component of the Deloitte Technology Fast 500 Asia Pacific Program which is reputed as one of the most established and objective ranking programs of fast growing technology companies in the Asia Pacific Region. Winners of the Deloitte Technology Fast 50 China Program will automatically qualify for the Deloitte Technology Fast 500 Asia Pacific Program with the regional winners to be announced on 6 December 2007 at an award presentation ceremony in Hong Kong.

The Deloitte Technology Fast 50 China 2007 program’s strategic partners include CEOCIO China and UK Trade and Investment, with supporting partners Bowne, China Venture Capital Association, Zero2IPO, Shanghai Zhangjiang Hi-Tech Service Centre, Caohejing Hi-Tech Park and Qinghua Science Park.

Source: Deloitte China

Editor: Helena Zhang

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