Insiders and officials have called for moves to streamline the IT industry and combine it with traditional industries.

Lou Qinjian, vice-minister of the Ministry of Information Industry (MII), said the country needs to change the industrial structure of its IT industry and raise the share of IT services in the entire industry.

With the development of software and network technologies, he said, the penetration of IT services into traditional industries is going deeper and deeper and IT services have become a growth engine for the nation's information industry.

According to the domestic market research house CCID Consulting, the IT service market rose by 44 per cent year-on-year to 29.59 billion yuan (US$3.57 billion) in the first six months.

Huang Yong, senior vice-president of CCID Consulting, said: "Compared with the slow growth of IT hardware and software, the growth momentum of IT services was even more encouraging."

CCID Consulting's statistics show the share of IT services in the industry rose from 12 per cent in 2001 to 16 per cent last year, while the share of hardware narrowed from 77 per cent to 72 per cent in the period.

A survey done by CCID Consulting among 29,073 samples from March to July indicates that the overall satisfaction of customers on IT services rose from 77.9 per cent in last year to 81.1 per cent.

About 38 per cent of the survey participants said they were satisfied or very satisfied with software service charges, and only 17 per cent said they were not satisfied or had no comments.

With the increase of customer satisfaction, the quality of the IT services has also improved.

Many companies have successfully transformed from equipment manufacturers or providers to professional service providers and the reputation of famous service companies like IBM, HP, Lenovo and Digital China are set up.

Lenovo, the country's biggest computer maker, formed a joint venture the Lenovo-AsiaInfo Technology Co Ltd with telecom service provider AsiaInfo, aiming to develop it into the biggest IT service provider in China.

Huang predicted that with increasing demands from customers and the rise of service providers' capabi-lity, the IT service market will grow at an annual average of 23 per cent from 69.88 billion yuan (US$8.44 billion) in 2004 to 156.77 billion yuan (US$18.93 billion) in 2008.

Its share in the whole IT industry will also rise from 17 per cent to 21 per cent in the period.

However, regional and industrial market entry barriers and chaotic competition remain obstacles to the future development of the business.

Yu Bing, chief executive officer of Lenovo-AsiaInfo, said many IT service providers have their own procedures and criteria in delivering services to customers, which have caused interconnection problems as well as difficulties in evaluating the quality of the services.

He called for the nation to set up a unified service standard to regulate the market better and create a favourable environment.

(China Daily August 24, 2004)