Dell's mainland supply orders reach US$23b

PUBLISHED : Friday, 21 March, 2008, 12:00am
UPDATED : Friday, 21 March, 2008, 12:00am


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Computer maker Dell yesterday unveiled a plan to buy US$23 billion worth of technology components and related products from the mainland this year, topping its purchasing commitment to mark 10 years of doing business in the country.

The world's second-largest computer supplier's latest sourcing programme represented a 28 per cent increase from US$18 billion last year, reflecting a growth trend that would continue, chief executive Michael Dell said in Beijing.

'Including last year, this year and expected purchases next year, Dell will purchase US$70 billion worth of computer-related supplies and equipment from China,' Mr Dell said. 'We've become the third-largest computer-systems company in China, and are growing rapidly.'

Dell still faces strong competition from Lenovo Group, the country's top personal computer supplier, and global market leader Hewlett-Packard, which is the No.2 vendor on the mainland.

With more than 6,000 employees in that market, Dell has responded to the challenge by boosting manufacturing operations in Xiamen, growing its design centre in Shanghai, and increasing points of sale to 1,000 cities from about 45 cities last year.

Despite a restructuring and new retail partnerships worldwide, including with mainland consumer electronics giant Gome Electrical Appliance Holdings, Dell saw its global net profit for its fiscal fourth quarter to last month fall to US$679 million from US$726 million a year earlier.

'We remain neutral on Dell, as there is still a long way to go to turn around its operations,' analysts at United States investment bank Cowen said in a research note.

Mr Dell yesterday pledged to invest 1.7 million yuan (HK$1.87 milion) in new Dell Learning Centres for rural migrant children and to give one million yuan to plant trees in the capital's Chaoyang district.

A 2005 Peking University study estimated that Dell's spending on the mainland this year would contribute more than US$50 billion to the country's gross domestic product and support more than two million jobs.