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To: Sig who wrote (84423)	12/9/1998 5:11:00 PM
From: Mohan Marette	Respond to of 176387

<China> declares war on PC smuggling. Sig: Here is an interesting development in China,I heard they recently hanged one of the big-wig smugglers. How'bout adopting the same punishment for some of the criminals here in the U.S? ================================================================= China''s Government War on Smuggling PCs Impacts Distributors and Pricing; Evidence Revealed by New Monthly Measurements of China''s PC Market CUPERTINO, CALIF. (Dec. 9) BUSINESS WIRE -Dec. 9, 1998--The newly published "China's PC Pulse," a monthly set of statistics measuring the health of China's PC market, quantifies its booming PC market and reveals the impact of recent efforts by the Chinese government to halt PC smuggling into China. PC distributors across China responded at the end of October to a battery of seven questions regarding sales, bookings, inventories, pricing, and staffing. Summary of the results show that sales and bookings from clients were reported to be "far above" the previous month by 67% and 63% of the distributors, respectively. However, 60% of distributors reported that their inventories were also far above the previous month. Advanced Forecasting-HuiCong (AFHC), a Cupertino market research firm specializing in information on China's high-tech markets,attributes this unusual simultaneous increase in both PC sales and inventories to the Chinese government actions. A major change in China's PC market is currently under way. The Chinese Government has been trying to stop the smuggling of PCs and related important components, like CPUs. As a result, the inflow of inexpensive PCs has been reduced substantially, and consequently the price of PCs in China is rising. AFHC estimates that from August to October, 1998,the ASP of PCs has increased 10%! Resellers of high-tech products expect the situation to continue during the following six months. They anticipate future price hikes and increase their orders from vendors in order to accumulate inventories. Consumers, on the other hand, hesitate to buy at the higher prices, contributing to the inventory increase. This situation applies to consumer electronics in China (such as TVs) that have been smuggled as well. Halting this smuggling became a primary focus of the Chinese government because it has posed unfair competition to domestic manufacturers that are also burdened by the strengthening of the Yuen (which makes exporting more difficult). One of the leading companies impacted by the recent actions of the Chinese government is COMPAQ. It was a top PC vendor in China, though domestic brands have taken over its market leadership during the past two years. More information on domestic and foreign PC vendors, their strategies and operations in China, is detailed in the recently published AFHC's report on China's PC market. "China's consumption of PCs has sustained an annual growth rate of approximately 50% during the past three years," says Dr. Peng Fu, chief analyst of AFHC in Cupertino. "For 1998, we forecast a 35% increase. It is obvious that China is becoming an important consumer of high-tech products, impacting the global growth pattern," he adds. Note to Editors: A detailed table and graph of China's PC Pulse are available from AFHC via e-mail or fax. -0- jh/sf* mi/sf CONTACT: Advanced Forecasting-HuiCong Dr. Peng Fu/Dr. Moshe Handelsman, 408/725-2964