The Legend Group, China's biggest manufacturer of personal computers, plans a big push into foreign markets soon, probably including forays into the US and Europe, a senior Legend executive said Friday.
Mary Ma, the chief financial officer and senior vice president of Legend's publicly traded unit, said in a speech here Friday that the group's recent entry into the Hong Kong market was just the beginning of an effort to sell Legend computers around the world.
"The next step will probably be a market test in the US and Europe," she said.
Legend's goal is to increase the share of its sales from markets outside China to 25 percent to 30 percent by 2006, compared with less than 7 percent now, Ma said told the Asia Society.
The company plans an extensive marketing campaign to raise consumer awareness of its brand as it enters other countries. Legend is also considering overseas acquisitions as it studies how best to distribute its computers, Ma said. She repeatedly mentioned that she saw Dell as an important future competitor.
"We don't want to establish Legend as a brand of cheaper, lower quality," Ma said. "Acquisition is one of the possibilities, and hopefully we can go through other people's distribution channels or partnerships."
The Chinese market for personal computers is expected to pass the Japanese market in sales this year to become the world's second largest, after the US. Because the cost of even a simple desktop personal computer can equal two or three years' savings for a typical urban Chinese household, ruthless price competition is common.
While many multinational technology companies do much of their manufacturing in China, most domestic Chinese technology companies have been satisfied with supplying the fast-growing domestic market and with working under contract for foreign companies, instead of establishing their own brand names overseas.
Legend and other domestic personal computer companies have thrived in this market at the expense of multinational companies, which have struggled to expand their sales beyond the foreign subsidiaries of other multinationals. According to IDC, a big information technology consulting company, Legend has 27 percent of the Chinese market, with Founder, another Chinese company, in a distant second place, with 9 percent of the market.
Legend has gotten off to a slow start in Hong Kong, however, with local electronics stores repeatedly discounting its computers as customers have stuck to brands they know.
Bryan Ma, a computer industry expert at IDC who is not related to Ma, said Legend could face an uphill struggle in Europe and especially the US, and might fare better in emerging markets like Latin America. Brand awareness is much more important to American consumers, while corporate customers tend to value suppliers who can provide entire computer systems, including services, and not just boxes of computers, he said.
The Chinese market is also growing faster than foreign markets, increasing Legend's sales there. Together with the considerable efficiency and growth of Dell's operations, these factors could make it difficult for Legend to reach its target for 25 percent to 30 percent of its sales to come from overseas operations by 2006, Ma of IDC said. "I suppose that's believable, but the execution is going to be the key factor."
Ma estimates that computer-related services were just 6 percent of the information technology market in China, compared with 40 percent in the US, and said that Legend planned to offer more services. Legend intends to increase its spending on research and development for new equipment and software to 3 percent to 5 percent of revenues, compared with 1.8 percent now, she added.
Legend sells computers equipped with both Microsoft's Windows operating system and with its own operating system, which is in Chinese.
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