Hewlett-Packard said on Thursday that it will open a second manufacturing plant in China, in a bid to expand its manufacturing capability.
The 20,000 sq m factory, located in Chongqing in western China, will focus primarily on producing notebook and desktops computers for sale within the country. It is expected to be operational by 2010.
Todd Bradley, executive vice-president of HP's personal systems group, said while surging oil prices and the economic crisis have forced many multinationals to reduce their overseas investment, China would continue to play a central role in HP's manufacturing strategy.
The plant will primarily support the company's expansion in western China and will serve HP's customers in central Asia, the Middle East and in Europe in the long run.
As the largest foreign PC group in the Chinese market, HP has been actively expanding its business to compete with the domestic market leader Lenovo, which has a strong distribution and network set up in areas where multinationals like HP and Dell are not yet established.
In recent years, HP has been more aggressive in developing partnerships with local distributors and now has more than 7,000 retail stores in the country.
Isaiah Cheung, vice-president of HP China and the general manager of the company's personal systems group, said the new plant in Chongqing will allow HP to quickly meet demands and needs. "The establishment of the new plant will accelerate our expansion in the region," he added.
HP has already established manufacturing operations in Shanghai. It opened a China Development Center in the city in 2004, which enables HP to design products more specifically suited to Chinese consumers.
The new Chongqing plant could also help HP to counter the surge in manufacturing costs in some areas in eastern China.
China is the world's second largest PC market in terms of unit sales. PC sales in the country are expected to grow 18 percent in 2008 to more than 42 million units, according to the research firm IDC.
The growth rate, however, has hit a five-year low due to an uncertain economic environment and the impact of natural disasters such as the earthquake in Sichuan earlier this year.