IDC: By 2028, the overall market size of digital transformation in China will exceed 730 billion US dollars.

Recently, International Data Corporation (IDC) released the 2024 V2 version of the "Global Digital Transformation Spending Guide". The latest data from IDC shows that global digital transformation investments exceeded $2.1 trillion in 2023 and are expected to reach $4.4 trillion in 2028, with a five-year compound annual growth rate (CAGR) of 15.4% from 2023 to 2028. With the rapid development of the global digital transformation market, the application scope of technologies such as cloud computing, artificial intelligence, big data, 5G, etc. continues to expand. Global enterprises' digital transformation has entered a phase of sustained development, prompting them to increase their investment in digital transformation. Chinese Market Focusing on the Chinese market, the Chinese government has been actively promoting the development of the digital economy and has introduced a series of policies to encourage enterprises to undergo digital transformation, such as the "Digital China Construction Overall Layout Plan" and the digital-related "14th Five-Year Plan". In addition, the widespread application of emerging technologies such as big data and generative AI globally has led to a growing demand for digital transformation among end-users in various industries. Therefore, China's digital transformation market is expected to maintain a high growth trend. IDC predicts that by 2028, China's digital transformation spending is expected to reach $733 billion, accounting for approximately 16.7% globally, with a five-year CAGR of approximately 15.6%, higher than the overall global digital transformation growth rate. Hardware Dominates Chinese Digital Transformation Spending, but Software Spending is Growing Faster In Chinese digital transformation spending, hardware spending accounts for the largest share in the five-year forecast, maintaining around 50% of the investment share over the next five years. Hardware will continue to dominate, especially as the rapid development of generative AI has driven early hardware infrastructure spending in China. IDC predicts that by 2028, China's digital transformation hardware market spending will exceed $370 billion with a five-year CAGR of 15.6% from 2023 to 2028. From 2023 to 2028, the software market in China's digital transformation is expected to have the highest growth rate, with a five-year CAGR of 19.8%. IDC predicts that by 2028, China's digital transformation software market spending will exceed $120 billion. The emphasis on software by both the government and enterprises is increasing, and the trend towards software as a service (SaaS) is gaining momentum, leading to higher growth than the overall market growth, with software's share of digital transformation spending increasing from 14.1% in 2023 to 16.8% in 2028. Future investments in the Chinese digital transformation market will further tilt towards cloud-related markets In terms of deployment models, cloud computing is a key technology for achieving digital goals and supporting hybrid working models, making it one of the country's strategic focuses for the coming years. As cloud computing technology develops and matures, the strategic demand for enterprise digitalization is increasing, leading to more businesses adopting cloud services to support their operations. Strengthening investments in cloud-related markets has become a major trend. From 2023 to 2028, the share of cloud-related market spending in overall digital transformation spending in China is increasing annually, with cloud-related market spending accounting for 15.7% of digital transformation spending in 2023 and projected to reach 20.0% in 2028, with a five-year CAGR of 21.4%. Generative AI is developing rapidly, with its share of digital transformation spending continuing to rise Currently, the ICT industry is in the era of AI transformation, with AI-related spending accounting for 5.5% of total digital transformation spending in 2023, a proportion expected to reach 6.18% in 2028. Within the digital transformation market, spending on generative AI is growing rapidly, with a five-year CAGR of 32.7%. In 2023, the Cyberspace Administration of China issued the "Interim Measures for the Management of Generative AI Services", encouraging innovative applications of generative AI technology and accelerating its implementation in various industries and fields. IDC predicts that by 2028, generative AI technology spending in the digital transformation market will reach $12.7 billion, with its share of digital transformation spending increasing from 0.87% in 2023 to 1.73% in 2028. Industries and Application Scenarios From the perspective of end-users, the discrete manufacturing and process manufacturing industries remain the main spenders on digital transformation, with their combined spending accounting for over 25%. As a major spender in the manufacturing industry, the automotive manufacturing sector is rapidly advancing in its digital transformation process. The development of GenAI technology is promoting the upgrade of the connected car system to an intelligent computing infrastructure, while intelligent algorithms are driving more advanced autonomous driving solutions in the automotive manufacturing sector. Within the manufacturing industry, machine manufacturing and autonomous operations are high-investment application scenarios for digital transformation. In addition, traditional retail enterprises are continuously increasing their investment in digital transformation to achieve comprehensive digital transformation by leveraging digital technologies such as the internet and cloud-native technologies to build their business systems. IDC data shows that the retail industry is expected to have a high growth rate of 20.7% in the next five years, leading the way in digital transformation among industries.