Hewlett-Packard Co, the world's second-largest computer maker, plans to reenter the market for desktop personal computers for consumers in China within six months, after losses prompted it to pull out in 2001.
The company, which bought Compaq Computer Corp about six months ago, is targeting consumer sales in China of at least $100 million for the year ending October 2004, Adrian Koch, senior vice president overseeing Asia sales, said in an interview. It sold US$5.1 billion of PCs worldwide in the fourth quarter.
PHOTO: REUTERS
Hewlett-Packard is looking to return because China now has established consumer electronics retailers, removing the headache of distributing PCs to thousands of small, independent shops, Koch said. It will clash with Dell Computer Corp, which has slashed prices to grab a 5 percent market share and Beijing-based Legend Holdings Ltd, which has about 30 percent.
"It's a very price-competitive market and the local players dominate because they have very strong distribution networks," said Dane Anderson, an analyst with market research company IDC.
Consumer PC sales in China will rise 41 percent to 5.5 million in 2004, from 3.9 million last year, according to IDC.
Those sales will account for US$3.6 billion in 2004 compared with US$3.4 billion in 2001.
Worldwide, consumer PC sales will rise 13 percent to 43.7 million units in 2004 from 38.8 million units last year. Revenue will decline to US$38 billion from US$43 billion in 2001.
"Given the size of the Chinese market and the growth of that market, there is no other choice but to be there," Koch said in Singapore.
The previous decision to quit the market, made because the company was losing money in China, was too "short-term oriented," he said.
Legend Group shares fell US$0.05 to HK$2.875 as of 10am.
Hong Kong. Hewlett-Packard shares fell US$0.86 to US$18.37 in the US Dell fell US$0.30 to US$28.75.
In China, Dell is targeting primarily government agencies and businesses, said William Amelio, the company's president for Asia Pacific and Japan.
"We've had stunning results there and we are excited about our performance," Amelio said in an interview.
Because Dell sells its computers mostly over the Internet or telephone, the fact that many Chinese lack credit cards has been an obstacle to increasing consumer sales.
Hewlett-Packard is still working on the details of its strategy for China, Koch said. The company may be able to satisfy increasing demand for more expensive and sophisticated PCs, Anderson said.
Hewlett-Packard earlier this year decided to stop selling PCs to consumers in Japan because costs were too high, Koch said.
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