Sun Aims to Double Sales in China
By LORETTA CHAO
September 18, 2007 9:20 a.m.
BEIJING – Sun Microsystems Inc. plans to double its revenue in China within three years, making China surpass Japan as its largest market in the Asia Pacific region, according to senior executives.
The Santa Clara, Calif., maker of computer servers and software plans to drive much of its growth through a series of strategic joint ventures with its existing resellers and distributors, the first of which they expect may be completed within six months, two Sun executives said in an interview Tuesday.
"China is a market of huge importance to us strategically," said Don Grantham, Sun's executive vice president of global sales and services. "The plan here is to grow our business very, very significantly."
The joint ventures, which Sun calls the Sun Equity Partner Program, will allow distributors to sell servers under the Sun's name and enable Sun to expand quickly in China while keeping costs down, which company officials have said is a priority. The program will begin with two pilot ventures and then accelerate from there, Mr. Grantham said.
Sun's revenue in the Asia Pacific region in the fiscal year through June 30 totaled $2.37 billion, more than a sixth of Sun's total world-wide revenue of $13.87 billion, with 11% year-on-year growth in Asia. Sun executives declined to specify how much of that revenue comes from China. But Lionel Lim, president of Sun's Asia South and Greater China businesses, says he expects China to replace Japan as the company's biggest market in Asia by revenue within two years. The company has almost 1,000 employees across four cities in mainland China including its engineering and sales teams.
Globally, Sun has been struggling for most of the decade to regain business lost after the Internet bust decreased spending by telecom and financial-services companies as well as other long-time customers. But the company has made a comeback in the past year, posting strong results for the most part and ending with a net income of $473 million for the fiscal period that ended June 30, compared with a net loss of $864 million for the year before.
The company's investments in China -- which is second only to the U.S. in number of Internet users at 162 million -- are part of push into fast growing emerging markets such as India and Brazil where the rates of new network end users are increasing rapidly, Mr. Grantham said. The numbers of people accessing networks via their mobile phones or playing online games makes the demand for Sun's products "exponential."
In addition to increasing server sales, the company hopes to set up sustainable growth through working with China's Ministry of Information Industry and government-run research and education institutes to develop global open document formatting standards, privacy laws and open source regulations.
Crawford Beveridge, the executive vice president and chairman of Sun Asia Pacific and other international markets for Sun, is in discussions now with the ministry to work on combining China's digital open document formatting standards with Sun's internationally accepted global standard so that documents will be readable throughout the world regardless of what applications users are opening them with.
Close working relationships with local governments is crucial to Sun businesses, Mr. Beveridge said. "Sun won't be successful if governments don't understand what we're trying to do."
Write to Loretta Chao at loretta.chao@wsj.com |
