Dell plans push into smaller mainland cities

PUBLISHED : Saturday, 01 December, 2007, 12:00am
UPDATED : Saturday, 01 December, 2007, 12:00am


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Dell, the world's second-largest personal computer supplier, will boost its expansion into smaller mainland cities and enlist new resellers to compete more directly with domestic market leader Lenovo Group and global rival Hewlett-Packard.

'We intend to have a presence across 1,000 cities [on the mainland], as opposed to 45 cities where we are today,' chief executive Michael Dell said yesterday, after announcing the company's latest quarterly results.

Dell, the No4 personal computer supplier on the mainland, will set up operations in so-called tier-four, five and six cities - those with populations of 500,000 to three million - where computer purchases are rising and dominated by domestic brands Lenovo, Founder and Tongfang.

'Our competition operates in all six tiers [in terms of city size],' said Steve Felice, Dell's president for Asia-Pacific and Japan operations. 'Clearly, this requires us to be in many remote locations.'

Mr Felice said the company, which started direct selling to the mainland eight years ago, was increasing its headcount in the country, where it has about 6,000 staff, to support the broader market coverage.

He said Dell expected 'very significant progress' in its mainland expansion next year, being in discussions with new retail partners to reach more consumers, and new value-added service providers and systems integrators to serve the commercial sector and small businesses.

Mr Felice declined to elaborate, except to say that Dell 'has quite an aggressive presence' in the mainland's consumer sector through partner Gome Electrical Appliances Holding, the country's biggest consumer electronics retailer. Gome started selling Dell computers at 50 stores in October.

'We're off to a fine start. We're building faster than what we expected. Gome has a capacity of several hundred stores,' Mr Felice said.

For its fiscal quarter to November, Dell reported an 8.51 per cent year-on-year increase in revenue to a record US$15.65 billion.

Steady growth from emerging markets led by the mainland, Brazil, Russia and India was the earnings driver. Revenue from the mainland rose 22 per cent on unit shipment growth of 26 per cent.

Dell faces an uphill battle against Lenovo, which had a 28.8 per cent mainland market share in the third quarter, according to research firm International Data Corp.