INTERVIEW-Dell prepares for China takeoff
Reuters Story - March 30, 1998 05:58
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By Josephine Ng
SINGAPORE, March 30 (Reuters) - U.S. personal computer maker
Dell Computer Corp is preparing to grab a large slice of the
business in China and to move into direct selling there when the
market is ready, senior officials said on Monday.
"We are building a team and we should be shipping products
there later this year. Initially we are shipping desktops,
notebooks and servers. Over the next year, it will be a full
range of products," Morton Topfer, Dell's vice chairman, told
Reuters in an interview.
Known for its direct method of selling, Dell nonetheless has
been marketing in China through a network of distributors.
After many months of negotiation with Chinese authorities,
it bought a 50,000 sq m piece of land and is opening a sales,
manufacturing and customer centre in Xiamen in Fujian province.
Its China move is a harbinger of things to come, the
officials said.
"One of the major reasons for our investment in China is to
set the platform, the foundation and the infrastructure to
support our customers for the decades ahead," Phil Kelly, Dell's
Asia Pacific president, told Reuters.
"When the time is right, we will bring the direct model to
China," he added.
Kelly declined to predict when China would be ready for the
direct model but conceded Dell's activities in China were an
indication it could happen sooner rather than later.
But for complete coverage, Dell was likely to work through
distributors for a while, Topfer said.
Dell uses the direct method in 11 Asian countries and sells
through distributors in another 39, essentially to global
accounts, the officials said.
Based on its achievement in Asia where it is ranked ninth
after only three years, Dell expected to move quickly up from
being number 11 or 12 in the China marketplace now, Topfer said.
Kelly said China's server market was a large pie waiting to
be carved.
"The server market in China is about a third of the total
market in Asia Pacific. The China market itself is growing so
fast it seems to dwarf every other market in Asia," Kelly said.
China, the second largest Asian PC market outside Japan, was
still dominated by desktop sales to the government sector and
corporations.
Dell would concentrate manufacturing for Asian markets at
its China site and Malaysian plant in Penang, Topfer said.
In its fourth quarter ended February 1, much of Dell's
growth in Asia was driven by China. Asian sales surged 79
percent to US$240 million despite regional economic problems.
Within Southeast Asia, Dell maintained a strong outlook for
Malaysia and Thailand, where it had grown 100 percent year on
year, Kelly said.
Growth was slight in Indonesia last year, he said.
He said while markets in Thailand and Indonesia would shrink
this year, Dell would gain share from its competitors.
But he said: "We are working heavily on opening up a major
one this year," referring to new investment for direct sales,
support and sales services.
"I can tell you that the direct movement of Dell across the
region is not done," Kelly said.
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