Following the above analysis, we may conclude that the key investment areas in Sichuan IT are displayed in the following. The investment values are studied with CCID model.

Table 4 Industry Investment Appraisal

4.2.1 IC Industry

(1) Sichuan IC industry Investment Values Appraisal

Table 5 Sichuan IC Industry Investment Appraisal

Source: CCID

China is now the fastest growing region in the area of IC industry worldwide. 2004 saw accelerated growth in China against the previous years with a total volume of 21.95 billion chips and an annual growth of 63.7%. The industry sales reach 54.53 billion RMB with an annual growth of 55.2%. China 's market share in the global market grew to 3.7%.

It is not too difficult to see that IC industry is at its prime time in China . As the continuous development of the new markets for IT products like consumption electronic products, IC cards, vehicle electronics and mobile communication, China 's IC industry is surely have a bright future.

Sichuan IC industry has developed its solid industry infrastructure and positive investment environment. Sichuan IC industry will become the important area for Sichuan IT industry investment.

(2) Key Investment Areas

The future investment potentials in IC industry concentrate on 3 aspects:

•  The areas there already exist solid foundation with great potentials, for example, Hi-end IC designing. The investors take the advantages of existing infrastructure, human resources and R&D capability. Taking into consideration of the regional specifics and the gathering of the talents in Chengdu , hi-end IC designing could be in Chengdu ;

•  Investing in the missing parts of Sichuan IC industry chain, i.e., the IC chips manufacturing. At present, Sichuan does not have any IC manufacturers. Yet, Chengdu has developed some capability either in the upper and/or in lower parts of the chain, in designing and testing. Making investment in IC manufacturing at Chengdu can capitalize on the existing industry capability in Chengdu ;

•  Investing in the relate areas, i.e. Semi-conductor. Leshan has developed its IC relate semi-conductor capability with scale. The Leshan Phoenix, the largest of the kind in Asia, is the semi-conductor investment by Motorola in Sichuan . Semi-conductor project could be located in Leshan to take the advantages of industry cluster effects and to share the industry resources.

(1) Sichuan Hi-end TV Investment Appraisal

Table 6 Hi-end TV Investment Appraisal

Source: CCID

The global economy moving ahead and the American economy getting better are pulling the demand for the hi-end TV that suggests a major upgrading for TV. On the one hand, the consumers more and more demand for better technology and more impressive audio-video goods with increasing consumption expenditures, on the other, the manufacturers double their efforts in developing new products. They reduce the R&D time and improve the consumers' perception and recognition of hi-end TV products. These factors stimulate the demand. According to CCIC survey and research, in 2004, about 21.94 million hi-end TV sets were sold worldwide, an annual growth of 83.67% with a sales volume of $36.945 billions. For the same year, Sales of hi-end TV in China reached 20.529 billion (RMB), a 54.92% yearly growth from 1.7507 million set sold. It is a strong and clear indication for hi-end TV market potentials.

Sichuan has very solid industry infrastructure for hi-end TV manufacturing. Sichuan Changhong is the leader in the industry in China . TCL will set up its TV manufacturing facility in Sichuan . Sichuan is the traditional manufacturer for electronic parts and components in China .

(2) Market Segments

There are large numbers of different hi-end TV brands in the market place home and abroad. The most popular ones are products CRT projecting TV, LCOS projecting TV, LChengduTV, PDPTV ， and newly developed OLEDTV and SEDTV. The following segments could be considered for the potential investments: CRT projecting TV, LChengduTV, PDPTV and the relate parts and components.

(1) Sichuan Home Intelligent Network Appraisal

Table 7 Sichuan Home Intelligent Network Appraisals

At present, with the concept of home intelligent network accepted by the market place, the industry is experiencing a fast expansion in the world. The industry has developed its scale integrating computer, network, telecommunication, home appliances, digital contents and services.

The market size reached $37.1 billion of sales for 2004 by CCID survey, an annual growth of 105%. China is at the starting stage, yet the market future can never be underestimated. Micro-soft signed the strategic agreement for collaboration with Changhong in this field indicating China 's home intelligent network industry will move into a new phase.

Sichuan has a rather positive environment for the industry development. Despite that Sichuan is just starting, we have developed some bases in traditional home appliances and more advanced home appliances, facility making, for both telecommunication and network, wide band interface services and contents provision services. If the investors can take the advantages and make investment in the area, the chances are really good to become the industry leaders in China and generate good investment returns.

(2) Key Areas for Investment

The followings are recommended: intelligent home appliances, digital TV and the related areas, wide band interface and contents provisions.

(1) Sichuan Software Investment Appraisal

Table 8 Sichuan Software Industry Investmennt Appraisal

Source: CCID

Responding to the global economic development and the market demand dynamics, IT industry is moving to services oriented from the hardware oriented. The software industry is becoming the leading and backbone industry with strategic importance in all the nations, as well as the focus of competition. According to CCID, in 2004, the global software industry had made sales of $886.2 billion with an annual growth of 11.5%. The industry in China continues its expansion and generated sales of RMB220 billion in 2004 with an annual growth of 37.5%.

The software industry is the traditional industry for Sichuan . After many years of hard working, Sichuan has made great progress in this field relying on its professional talents and the positive industry environment, as reflected by the annual growth of over 30% in the recent years. Sichuan is both an important software development base as well as an important user market. The industry has great potentials.

(2) Key Areas for Investment

3 key areas could be considered:

•  Outsourcing services through sole foreign proprietorship, joint-ventures;

•  Focusing on application software technology and digital recreational software technology, capitalizing on the existing local achievements in the area;

•  Deyang is the state key and large equipment and machinery manufacturing base in China . Investing in relate built-in software technology and providing matching capability for equipment and machinery manufacturing is expected to have good returns.

(1) Sichuan Information Security Investment Appraisal

Table 9 Sichuan Information Security Investment Appraisals

Source: CCID ， 2004

The information security is of critical and strategic importance to a nation's security, political stability, economic development, social life and healthy culture. It takes the lead in IT development and quite policy sensitive. Consequently, information security technology and development has a vital position in a nation's aggregate strategy as well in IT industry planning. Information security has been the hot area in IT development for years. According to CCID resource, the global sales from information security products and technology in 2004 totaled at RMB 220 billion, with an annual growth rate of 19.2%. Information security industry in China is quite complete and comprehensive. For 2004, the sales in China were about RMB2.87 billion with an annual growth of 31.1%.

As the industry base for information security technology, Sichuan is strong. There are currently 55 firms registered in security industry in Sichuan , about 20 of them have the self-developed products with intellectual rights. In 2004, the firms made sales of RMB2.239billion, number one in China by far, with a market share of 22% in China . In addition, Sichuan has very R&D capability, as the province has a group of Chinese first class R&D institutions, colleges and universities as well as companies, namely, Sichuan Electronic Group, Southwest Telecommunication Research, Safeguard, and Sichuan University Capable. We feel comfortable to say that Sichuan 's advanced industry is of great potential.

(2) Key Areas for Investment

With the rapid growth in economic and social development in China , information security market in China has great potentials. The market will reach its peak within 305 years. It is predicted that the industry will move into its “prime time between 2005-2009. Investing in Sichuan in thee area is definitely of a good future. Tasking the Sichuan industry advantages, the investment can be considered in civil information security, security basics, specialty security, reinforced IT security, and software security.

(1) Sichuan IT Services Investment Appraisal

Table 10 Sichuan IT Services Investment Appraisal

Source: CCID

As China is now a full member of WTO, market is being opened and the domestic enterprises are competing globally. The informationalization process of industries will surely be accelerated. The demand for IT services will grow steadily.

The above analysis indicates that Sichuan IT services have positive market environment for development. It is particularly so against national market and growth pace. From the perspective of the industry itself, there are no serious entry barriers in different segments of network services, IT operation, technical support, system integration, IT training and education. Sichuan IT services also have good future.

(2) Key Areas for Investment

The volumes, the types of IT services as well as the providers are rapidly increasing. The services sector of IT industry is currently the focus of competitions. The high growth in China attracts many firms. The services to small business have become the focus for competitors in the marketplace with a continuous growing share in the services segment.

The Sichuan IT investment opportunities for the investors to consider exist in the 3 segments: network services; IT operation managing services and consulting. As for supporting and maintenance services, system integration, and training/education, due to their rather low barriers of entry and the resulted competition, they could be the secondary consideration area or not to consider.