China's small and medium-sized enterprises (SMEs) are likely to spend hundreds of billions of yuan on IT products in the next two years, according to a report released by a research company.

IT expenditure by the companies is expected to grow 16.5 per cent this year from last year, to 142.77 billion yuan (US$17.85 billion). The expenditure will likely rise to 186.92 billion yuan (US$23.4 billion) in 2008, said the report released by the China Centre for Information Industry Development Consulting.

Spending on computer hardware accounted for 67.6 per cent of last year's IT expenditure by SMEs but its rate of growth is lower than that of the IT market as a whole. Expenditure on IT services grew by 20 per cent last year, said the report.

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