Compaq in trouble in Mainland China.
Hi Kemble:
As if Compaq doesn't have enough trouble,now this!Man now I am beginning to feel kinda sorry for them.
Compaq China's PC business has been plagued by problems in the past 12 months. Figures from International Data Corp (IDC) show that Compaq's PC shipments in the mainland plunged 16 per cent last year, compared with 1997, while the overall market grew 30 per cent. Compaq's market share dropped to 4 per cent last year from 7 per cent in 1997.
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Tuesday, April 27, 1999
PERSONAL COMPUTING
Mainland - Shakeup at compaq
CAROLYN ONG
Courtesy:Technolgoy Post.
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Hurt by weak personal-computer sales in the mainland, Compaq Computer is undergoing a broad restructuring of its mainland operations, including changes to its management team.
Problems caused by the huge task of integrating the operations of Digital Equipment Corp, which Compaq bought in January last year for US$9 billion, were to blame for the sales slump, analysts said.
The same problems at the corporate level led to the sacking of Compaq chief executive Eckhard Pfeiffer earlier this month.
Compaq's mainland sales partners were confused by the company's reorganisation, and this affected sales of the company's PCs.
Compaq also was hurt by factory problems last year as well as Beijing's anti-smuggling campaign that limited the import of foreign-made PCs.
The status of Philip Leung, Compaq's former vice-president and managing director for Compaq East Asia, remains uncertain. Mr Leung was demoted two years ago to deputy managing director for Compaq's mainland operations.
According to Tony Leung, director of marketing for Compaq Greater China, Philip Leung is still on the Compaq payroll but "is currently not active in the organisation in the PRC and has been without a designation for a couple of months now".
Philip Leung was unavailable for comment. Another top Compaq official, China managing director Henry Tse, was also rumoured to be leaving, but Compaq officials said Mr Tse was still in his position. Tony Leung said Compaq China's reorganisation was unrelated to Mr Pfeiffer's recent departure, having started in January. Compaq Hong Kong would be unaffected.
Compaq China's PC business has been plagued by problems in the past 12 months. Figures from International Data Corp (IDC) show that Compaq's PC shipments in the mainland plunged 16 per cent last year, compared with 1997, while the overall market grew 30 per cent. Compaq's market share dropped to 4 per cent last year from 7 per cent in 1997.
"Part of the problem was necessary due to a series of restructuring because of the merger. Compaq GCD [Greater China Division] was newly formed in 1997 when they brought in Henry Tse from IBM to oversee the group. It's not unreasonable to give Compaq some time to find its footing," Kitty Fok, PC research manager, IDC Asia-Pacific, said.
<B.Ms Fok said Beijing's anti-smuggling crackdown last year had hurt Compaq. Previously, most PCs were imported into the mainland through "grey channels" to avoid high import taxes. The crackdown stopped most of that, choking the supply of PCs imported into the mainland market.
"IBM and HP were totally unaffected by the anti-smuggling campaign because they have factories in China. But Compaq has insufficient manufacturing facilities in China," Ms Fok said.
Last year, Compaq closed its factory in Shenzhen after the Digital merger, believing ti would not be needed, but ran into problems with its joint venture with mainland maker, Start. Compaq is now planning to reopen its factory in Shenzhen this year.
"Problems like this are never independent from problems with management," Ms Fok said.
Compaq's problems have been a boon to IBM, which ranks second on the mainland. IDC said Compaq led IBM last year in the Asia-Pacific, but IBM sold more PCs than Compaq in the second half of last year and is threatening to overtake Compaq this year.
Compaq recently reported quarterly financial results, but refused to reveal its sales in Greater China.
Compaq also encountered logistical problems getting its PCs to market. As a result, it has split its internal channel organisation into two groups - one that handles value-added resellers that sell to large enterprises and another that handles comsuner sales. |
