Dell aims for bigger sales in China market

By Kelvin Soh and Don Durfee (China Daily)
Updated: 2010-12-20 10:51
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Dell aims for bigger sales in China market

An employee walks past Dell laptops, which are displayed for sale, at a Dell outlet in Beijing December 13, 2010. [Photo / Reuters]

HONG KONG/BEIJING - Dell Inc is likely to spend $250 billion in China on procurement and other investments over the next 10 years as it expands in the world's No 2 PC market, the head of its China operations said.

The forecast is more than double the $100 billion over 10 years given last month by another executive at the world's No 3 PC brand, and comes as Dell spends to boost sales to large corporations and in smaller Chinese cities, Amit Midha, Dell's head of Greater China and South Asia, said at the Reuters China Investment Summit.

Dell is on track to spend $25 billion in China this year, and is likely to spend $250 billion over 10 years if it continues spending at the current rate, Midha said.

"China, all of a sudden, is starting to become the centerpiece for us," Midha said at the summit.

"If you think about it, be it design, manufacturing, procurement, sales, service support, there's more and more that can be done more effectively in China than in many other places."

Dell will also launch a 10-inch tablet PC globally by the spring of 2011, Midha said, declining to give a more specific timeframe.

The new tablets would complement Dell's existing lines of 5- and 7-inch models, riding a wave of popularity sparked by Apple's iPad earlier this year.

Like its rivals Hewlett-Packard (HP) and Lenovo, Dell is increasingly looking to mobile devices and data services to diversify away from the heavily commoditized personal computers, where net margins can fall to the low single digits with brands such as Acer.

Dell will be designing its tablet PCs to target both corporate and retail consumers to differentiate itself from the iPad, which typically attracts more retail users, Midha said.

"This is going to be battle royale," he said. "This is not for the faint-hearted, and it's only the first inning of a very long game."

Dell is now the No 2 PC brand in China with a 9 percent share in the third quarter, ranking behind Lenovo's 27 percent, according to figures from research firm Gartner.

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Acer aims to be No 2 in China

The company, which made its name selling directly to customers through Internet and telephone orders, is now seeing web sales pick up in China and expects online sales to account for about 15 percent of its growth in 2011, up from 5 percent about two years ago, Midha said.

It will also focus on large corporate customers in larger cities such as Beijing and Shanghai, while simultaneously expanding its overall presence in smaller cities with an aim of building 800 service centers in fourth- to sixth-tier cities by the end of next year.

"China is a bit more of everything now," he said. "You can't choose. It's all about multiplying everything right now."

Acer, the world's No 2 PC vendor, also eyes the emerging market. It expects its China operations to make up more than 20 percent of its total sales in five years, helped by new tablet PCs and an alliance with Beijing-based Founder Technology.

Acer is betting heavily on its growth in the tablet computer market where it joined other rivals to compete with Apple's widely successful iPad.

"Tablet is a huge market and it shows a new path for new growth," Acer Chairman J.T. Wang said at the summit. Acer aims to capture a 15-20 percent share of the global tablet PC market next year

That would also help boost Acer's China revenue to $2.5 billion in 2011 from $1 billion this year, he said.

China operations account for 7 percent of Acer's total sales now.