Next big technology boom to bring growth for Chinese companies

26 Apr 2016

The next generation of technologies is creating new opportunities for Chinese companies that are at the forefront of a technological shift in the automotive, recreational and surveillance industries.

As the smartphone and tablet era settles, developments in four areas are expected to drive growth for Chinese tech firms in the years to come.

Allen Chang, Macquarie Securities Head of Greater China Technology Research, says the areas of likely growth are in virtual reality, advanced driver assistance systems (ADAS), drones and surveillance.

“Our view is that current technology – smartphones, PCs, notebooks – is reaching saturation stages. Most people already have them, so for PCs and smartphones we’re forecasting single digit growth in coming years,” he says.

“For future technology, which is the opportunities we see for technology companies, we are forecasting double digit growth.”

The launch of virtual reality headset models by major multinationals onto the mass market in 2016 is expected to accelerate development of the virtual reality industry, with more content and hardware likely to emerge as the user base increases.

But Chang says it is not just in gaming that virtual reality will prove influential in the years ahead.

He says there are a number of potential applications for the technology. Many industries are likely to realise over time  the immersive experience offered by virtual reality is a way to provide new ways to communicate with their consumers.

“Initially, everyone thinks it’s only for gaming but there’s a lot of other opportunities in various areas – education, medical, tourism – to help people better present their technology to consumers,” says Chang.

“On the medical side, for example, the doctor and patient can both wear the virtual headset and the doctor can show the patient 3D images of his or her body and better explain a diagnosis and how the problem can be solved.”

While drone and surveillance technologies are not new, they are advancing.

Smart home surveillance, data surveillance and the use of drones in commercial spaces such as agriculture and patrolling, will bring new windfalls for Chinese companies such as Hikvision that are leading suppliers of these technologies.

Drones are also able to be widely applied in precision agriculture, package delivery, disaster relief, fire rescue, public surveillance, organ transport, and even human transport.

Given the drone technology is still in the early stages of the product life cycle, Chang believes those products with good quality, reliability, and wider application will be successful in the long term.  

Verena Jeng, Macquarie Securities Greater China Technology Associate Analyst says that another area attracting investors is the booming field of driver safety systems or ADAS.

ADAS is a system of sensors and cameras that alerts drivers to potential hazards in their environment to avoid collisions and accidents.

The United States and United Kingdom are beginning to mandate the use of these technologies in new cars, a move expected to deliver growth for Asian firms dominating this space, such as Hong Kong’s SunnyOptical, which supplies vehicle lenses.

“From next year, we’ll see a lot of companies benefiting from these regulations and we expect these regulations will be expanded globally,” Jeng says.  

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For a full copy of the “Greater China technology – Tomorrow’s World”  report please contact your Macquarie Representative.