DESPITE pressure from the financial crisis to cut costs and rein in spending, Chinese firms are continuing to invest in the information technology sector, even in the most severely hit banking, automotive and real estate industries.

Firms across China are looking to cut costs and differentiate themselves from rivals by expanding their IT commitment. IT vendors too are flocking to China to meet demand as well as establish a strong base in the country while their overseas businesses suffer from the effects of the crisis.

The slowing economy has had the worldwide impact of making people focus on business process outsourcing business models, the convergence of IT and telecom services, and the continued importance of quality and security, according to Ovum, a global IT consulting firm.

"In this challenging economy, IT services providers must get ahead of these trends as they work to capture new customers and keep the ones they have," said Eamonn Kennedy, an Ovum analyst.

Finance

"It's a headache for me as too many (IT systems) can be upgraded and I don't know which should be first," said Patrick Bai, general manager of Bank of Shanghai's Information Technology Department.

Hewlett-Packard, Temenos, a global provider of banking software systems, and Bank of Shanghai said on Wednesday they had implemented a core banking system at Bank of Shanghai to streamline operations, reduce the time it took for new products to hit the market, and improve services for the bank's customers.

Bank of Shanghai, the country's major city commercial bank, said the system would enable them to better manage approximately 13 million customer accounts and process more than 2.5 million transactions per day from one point of contact. The integrated system covered multi-currency and both personal and corporate bank business, which used to be separate, the bank said.

Bai said the bank would continue to expand spending on IT next year despite the tough environment. Advances would be made in customer relationship management and Internet and mobile banking services, he said.

By comparison, in the United States financial sector, there had been almost "no increased spending" except to cut costs, experts said. As a result, Hewlett-Packard was seeking opportunities in the emerging markets of China and India, said Michael Blum, HP's vice president.

By 2012, the investment of the Chinese finance industry in IT would reach 13.76 billion yuan (US$2 billion), a 7.9-percent average annual growth, according to International Data Corp.

Automotive

Ovum said car makers were also putting new demands on IT to improve efficiency around energy, the environment and IT's consumption of resources.

"The crisis is a catalyst for our business and maybe it's an opportunity for Chinese home-grown industries," said Frank Khoshnoud, the head of Satyam global automotive business group.

Satyam is one of India's Big Four IT service providers. It provides services for all large car makers including General Motors and Nissan.

Khoshnoud said in recent years, all overseas car makers had cut their IT spending from 2 percent or 3 percent to 1 percent or 1.5 percent of total revenue. However they had sustained or increased their outsourcing budgets in the pre-sales and after-sales sectors, said the 25-year veteran of the automotive industry.

The crisis was also sending sales of luxury sedans crashing and opening up market space for environmentally friendly cars that cost less than US$5,000, according to industry insiders.

That's the target for Chinese car makers like Chery. Khoshnoud said firms like Satyam aimed to help home-grown vendors such as Chery explore the overseas market for such vehicles and help establish the brand and after-sales services.

Internet promotions have also become more important, with car makers, including BMW, investing more on Internet promotions through social Websites like Kaixin001.com. The Internet has proved an efficient and low-cost promotional tool compared with TV commercials.

Google, the world's biggest online search engine provider, said it expected online advertising business would continue to grow despite the tough environment.

The crisis would speed up the transition from traditional media promotion to online advertising, said Liu Yun, Google's vice president.

Other industries

Avaya, which provides intelligent communications systems, said it remained optimistic about the demand for IT from the Chinese hospitality industry.

"The financial crisis has influenced the market but we can't neglect the huge demand for inbound travel," said Chee Tat Meng, Avaya's Asia Pacific sales director of hospitality.

In Avaya's first financial half ended in March, its revenue from hospitality generated double-digit growth.

And last year, revenue from voice communications in the hospitality sector reached US$134 million in Asia Pacific excluding Japan, with about 44 percent coming from China, according to research firm Frost & Sullivan.