Dell expansion targets 1,000 mainland venues

PUBLISHED : Thursday, 03 April, 2008, 12:00am
UPDATED : Thursday, 03 April, 2008, 12:00am


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United States computer maker Dell is accelerating its expansion across the mainland by enlisting new local distributors for its business-orientated products in 1,000 locations.

The world's second-largest personal computer supplier and the No4 vendor on the mainland, yesterday unveiled its PartnerDirect programme in Beijing, which could intensify rivalry with domestic market leader Lenovo.

But Dell did not give a timeframe for the ambitious expansion of its distribution network. Dell aims to add about 1,000 resellers under the programme focused on the country's vast number of small and medium-sized businesses.

The initiative comes about six months after Dell started its mainland retail strategy for consumer-orientated personal computers with new partner Gome Electrical Appliance Holdings, the country's biggest consumer electronics retailer.

'Customers in China have made this Dell's second-largest country in terms of product shipments,' said Amit Midha, the president of Dell Greater China. 'PartnerDirect will enable us to satisfy even more customers.'

Dell expects to shortly add new solutions for specific industries and commercial resellers in assigned territories across the mainland.

With an indirect sales channel put in place, Dell aims to boost domestic demand for its enterprise servers, storage systems, Vostro notebook computers and the low-cost Dell 500 laptop.

According to research firm International Data Corp, Dell's fourth-quarter personal-computer unit shipments on the mainland grew 41.3 per cent year-on-year and helped it corner a 7.9 per cent market share. Ahead of the Texas-based company were Lenovo (28.8 per cent share), Hewlett-Packard (10.6 per cent) and Founder (9 per cent).

Chief executive Michael Dell said last month that his company would buy US$23 billion worth of technology components and related products from the mainland this year.

While its commitments on the mainland are growing to catch up with similar efforts made by global PC market leader HP, Dell is restructuring operations elsewhere in the hope of generating savings of US$3 billion over the next three years. That move includes shutting down its first factory in 24 years in the US.

'These actions could provide a buffer to our concern over [Dell's] indirect push,' JP Morgan analysts said in a research note. 'We are concerned that Dell's efforts to restore its market position through an indirect channel push, alongside its once-storied direct-only [sales] model, could lend to some hiccups, notably [regarding] margins and the cash conversion cycle.'