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To: Sig who wrote (72169)	10/15/1998 9:26:00 AM
From: Mohan Marette	Respond to of 176388

<PCs in China> The 'clone' makers of China. Sig: Here is a a bit of information I found regarding the PC market and clone makers in China.Clones seem to be popular among price sensitive consumers but local brands are gaining on them.This segment of the market has nothing to do with DELL or other international brands who are present in China but an interesting story nonetheless.I think as consumers gain PC experience on the 'clones' and as their income levels grow then they could be potential customers down the line for the Internationals. Excerpts ====================================== Cheapest thrive in mainland PC market International Data Corp (IDC) estimated the clone market last year at about 881,300 units, or 29.1 per cent of the mainland PC market by volume, with a total value of almost US$746.5 million. Clone PCs are defined as no-brand, low-cost desktop computers assembled by a small retailer or components vendor from parts stocked in its shop. They are not manufactured on assembly lines, do not carry trademark brands and the assemblers are not licensed. .......... The continued demand for low-priced PCs, the appeal of instant assembly and the growth in PC consumption in the home market all served to expand the clone's share of the PC market. IDC found that, in general, clone buyers knew which components they needed and what price points to hit. Overall, IDC found that more than 60 per cent of end-users felt clones could not match branded PCs in warranty and service offerings, as well as general quality. More than 48 per cent felt clone prices were better. Clone buyers in the home segment were especially price-sensitive because 33 per cent of them earned less than 3,000 yuan (about HK$2,790) a year. Despite the significant share of the PC market occupied by clones, IDC believes growth for the sector will diminish each year. The unit growth rate for the clone segment for 2000 is forecast at only 14.8 per cent, down from 23.8 per cent last year. The share taken up by small local brands is increasing, and competition is heating up with the push by multinational vendors towards sub-US$1,000 PCs. It is easy to see why the local-branded players are becoming a force to be reckoned with. The difference in price between a local-branded PC and a clone already is diminishing, with local-branded PCs priced only 10 per cent more than their clone counterparts in some cases. Couple that with the fact sellers of local-branded PCs offer a better service structure, and the shift towards buying branded PCs begins to make sense. Components vendors already have responded to the shifting market. Where once they targeted the clone-assembler market for distribution, they now seek to supply components to the local manufacturers and regional brands to achieve volume sales. Local brands such as Legend, Founder, and Great Wall also have thrived through various government policies, benefits, and resources. The clone segment, however, is not a recipient of such treatment from the government. Indeed, efforts made by the government to eradicate the clone market include the institution of the "Four No's" campaign. The rationale was that if clone assemblers were forced to register and possess trademark-branded PCs, they would have to move away from illegal components smuggling and software piracy activity, thus ensuring they would not be able to use their cost savings to undercut the legitimate local brands in price. The fact remains though, that there always will be a clone segment. Ultimately, the winners in the PC arena will be the consumers, who have a greater variety of low-cost, high-quality PCs from which to choose. (Sharon Chan is a PC analyst at International Data Corp. This article is taken from a recent report: A Study of the Clone PC Market in China.) source:SCMP