China to Follow U.S., Europe in 2020 Blockchain Spending – IDC
China will be behind the U.S. and Western Europe this year in terms of spending on blockchain solutions, a new update by the International Data Corporation (IDC) Worldwide Blockchain Spending Guide has shown. The U.S. is expected to spend more than $1.6 bln to be the largest geographic market, followed by Western Europe ($1.0 bln) and China ($457 mln) in the worldwide spending on blockchain solutions forecast to be $4.1 bln this year – roughly 70% of which will be for IT services and business services combined – making for a more than 50% increase when compared to 2019.
However, in all the nine regions covered in the Spending Guide (U.S., Canada, Japan, Western Europe, Central and Eastern Europe, the Middle East and Africa, Latin America, China, and Asia/Pacific) – which are all expected to see exceptional spending growth over the forecast period – China will lead the growth with five-year CAGR of 51.7% and Central and Eastern Europe (50.4% CAGR).
The guide, which is delivered on a semiannual basis, seeks to allow its users from the 19 industries identified – including banking, insurance, securities and investment services, retail, wholesale, transportation, professional services, healthcare provider, federal/central government, state/local government, telecommunications, media, and utilities – to easily extract meaningful information about the blockchain technology market by viewing data trends and relationships and making data comparisons. It is a critical input to the planning and monitoring cycles of the business process.
The fastest spending growth over the forecast period will come from the fourth largest industry overall, professional services, which will see a five-year CAGR of 54.0% while other industries such as healthcare and state/local government will show strong blockchain spending growth at 49.3% CAGR and 48.2% CAGR respectively. For the blockchain use cases that will see the most investment across all industries, cross-border payments & settlements; lot lineage/provenance; and trade finance & post-trade/transaction settlements come on top. The three use cases will account for more than a third of all blockchain spending throughout the forecast while asset/goods management (49.7% CAGR) and trade finance & post-trade/transaction settlements (49.4% CAGR) will see the fastest spending growth.
While the issues facing the global economy due to the COVID-19 pandemic have caused nearly every industry, market, and sector to re-evaluate core processes towards digital transformation including blockchain and distributed ledger technology is a factor as well as the ongoing race particularly between the U.S. and China on leading the global space in emerging technologies. The U.S. House of Representatives’ Energy and Commerce Committee recently passed the bipartisan “American Competitiveness Of a More Productive Emerging Tech Economy Act” or the “American COMPETE Act” which has been suggested to strengthen the much-talked about effort by the U.S. to challenge China on emerging technologies like blockchain.
Meanwhile, among countries that lead the way in artificial intelligence (AI) innovation, China has reportedly taken the lead making nearly 40 times as many patent applications than Europe, for example. Even while LG Electronics has emerged the leader of the brands at the forefront of patent applications over the past two years with 731, double of the company that has made the second highest amount of applications, Ping An Technology (308), there are questions about whether brands such as Huawei Technologies or IBM could catch up over the next two years and overtake the likes of LG Electronics.