China the next tech powerhouse: Deloitte

China is fast becoming a technology powerhouse and local Australian ICT firms risk losing their advantage if they ignore the country's influence on global standards, according to new Deloitte research.

A report titled “Changing China” found the country's standards initiatives will shape global competition in the tech industry for years to come.

David Hill, a partner at Deloitte, said tech vendors locally and internationally that misjudge China's impact on the tech economy could find themselves at a significant disadvantage with their position in the market “increasingly overtaken or encroached upon".

“Technology companies must carefully monitor China's actions, assess the implications of Chinese standards and amend their strategies accordingly," he said.

“Companies that don't may find themselves locked out of the world's largest and fastest growing marketplace, which is increasingly defined by standards that originate in China.”

Hill cited major moves by global software players towards China as a potential threat to local Australian operators that ignore the trend.

“The hardware guys are going there from a manufacturing perspective but now in a similar way to the transition across to India, a lot of software providers are now outsourcing the code and the programming across to China as well.”

There were also many start-up software companies in China, off the back of the rise in Linux platforms, he said.

“We see a lot of potential new standards for the IT industry coming out of China and our view is if that's ignored by [local players] they could find the standards in the western world that we've lived under could become irrelevant.

“What we're trying to do is flag to many of the Australian companies to not ignore what's going on [in China],” Hill said.

He added that whether Chinese hardware manufacturers establish a physical presence here or up their exports to Australia, a lot of product will start to come out of China.

The move towards a free trade agreement between Australia and China would only serve to underwrite that trend, he said. “Talks have progressed for some sort of a trade agreement between Australia and China.”