2004-01-20 10:34:13
China's laptop landscape to change
  Author: ZI MU,China Business Weekly staff

The competitive landscape in China's notebook PC market is likely to be significantly altered this year, as major global manufacturers begin to take on domestic players, industry professionals suggest.

Leading international notebook PC makers, which used to focus on pricy, high-end gadgets, are aggressively penetrating China's mid-range segment, a territory traditionally controlled by domestic players.

"I expect there will be fewer notebook brands this year," said Zhang Jian, sales director of Samsung Electronics' notebook PC division.

"Most small (domestic) market players will see meagre business growth in 2004."

The low-price advantages domestic makers used to enjoy are waning as foreign giants have fine-tuned their price strategies, Zhang said.

Prices of notebook PCs in China have been declining in recent years.

The price gap between domestic brands and foreign brands is not as significant as before, observers said.

That should be a shot in the arms of foreign makers: Chinese people usually prefer foreign notebook brands, but could not afford them in the past.

"In 2004, the strong will be stronger, and the weak will be weaker in China's laptop market," Zhang said.

"Many small domestic notebook makers are very likely to be washed out of the market."

Chinese IT product manufacturers used to enjoy unique advantages in localization and pricing, said Qu Xiaodong, an analyst with Beijing-based data tracking firm CCW Research.

However, "such advantages are gone (due to significant price dropping," he said.

"In contrast, Chinese firms' weakness, due to a lack of core technologies, is becoming magnified."

This year will be a turning point for manufacturers, as foreign makers are ready to regain the ground they lost to domestic players, the analyst said.

Chinese laptop makers used to focus on notebook PCs that cost less than 120,000 yuan (US$14,458).

Foreign brands control the market for notebooks that cost more than 120,000 yuan, but have aggressively expanded their product portfolios and slashed prices.

Both IBM and Samsung have specific notebook models aimed at different consumers.

Some foreign firms have cut prices - as low as 100,000 yuan (US$12,048) - of some of their notebook models.

Domestic laptop makers have not made headway into China's high-end market, due to their lack of core technologies.

Foreign vendors have been racking up notebook PC sales.

Samsung said it sold 900,000 units of notebook PCs in China last year, an 80-per-cent increase year-on-year.

IBM's notebook PC sales increased 75 per cent, year-on-year, in the first three quarters of last year.

CCW Research estimated 1.357 million units of notebook PCs were sold in China last year, a 45.8-per-cent increase year-on-year.

In 2002, the growth figure was 48.8 per cent.

Statistics from research firm IDC indicate notebook PC shipments in China in the third quarter of last year totalled 502,835 units, up 94.93 per cent year-on-year.

The market researcher has yet to disclose statistics for the fourth quarter, and for the full year.

Among the foreign vendors, IBM, Samsung and Toshiba are most likely to significantly eat into domestic makers' shares of the market, as they are becoming increasingly aggressive in the mid-range market, observers said.

IBM has begun penetrating into China's small and medium-sized cities, in addition to continuing to consolidate its leading position in the large cities.

IBM is already capable of taking away the notebook crown held by Legend Group, observers said.

Samsung has reshuffled its sales channels, and has vowed to become one of the top 5 vendors this year.

"We aim to sell 150,000 units of notebook PCs in 2004," Zhang said.

Core staff members of Beijing Capital, Samsung's nationwide sales agent in China, have been merged into Samsung.

(Business Weekly 01/20/2004 page1)

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