Dell to raise spending on China operations

Dell, buoyed by significant demand in the mainland's public sector and large-enterprise markets, will boost spending in key facilities, services and solutions for corporate customers in its second-biggest market after the United States.

The initiative announced yesterday is part of a US$1 billion global investment programme this year by the world's second-largest supplier of personal computers to build multiple data centres, enterprise solution hubs and so-called cloud computing services over the next 24 months.

It also marked an increased commitment by the US-based firm to the domestic market, according to Dell Greater China president Michael Yang Chao.

Dell, the mainland's No 2 personal computer brand, spends about US$25 billion annually in the local market, in manufacturing and sourcing of IT components and other related products.

'The fastest-growing parts of our business continue to be servers, storage and enterprise services, which make up the backbone of many of our [enterprise] solutions,' Paul Bell, the president of Dell's public and large-enterprise business units, said.

Yang said that Dell has more than 60 per cent of the server computers and storage systems used by the mainland's biggest internet companies, including gaming giant Tencent Holdings, online search provider Baidu and Alibaba Group, which controls top e-commerce firms Taobao and Alibaba.com.

That is why Dell 'will continue to increase investments in open, capable and affordable [enterprise] solutions in China', Bell said.

Market research firm IDC has forecast the size of the mainland's information and communication technology market to reach US$247.41 billion this year.

Dell plans to establish advanced new data centres - secure, internet-linked facilities that house server computers and storage systems - to encourage corporate adoption of cloud computing. This approach allows companies to cost-effectively use a range of software programs, business platforms, security systems and storage over shared computing resources linked to the internet on demand, just like the electricity grid.

Dell also will set up so-called 'global solution centres', including one in Shanghai, to help public-sector customers and large enterprises test cloud-based systems. Twelve of these centres will be built this year around the world and 10 more in the next 18 months, according to Bell.

Alex Yung, the general manager of Dell China's large-enterprise business unit, said the enterprise solutions and services segment has grown 25 per cent to 30 per cent annually over the past few years. 'Revenue from the large-enterprise business was well over the US$1 billion mark in China last year,' Yung said.

Richard Lee, general manager of Dell China's public-sector business, said demand from government agencies such as the ministries of education and health, 'are moving away from pure PC purchases to putting IT infrastructure in place'.

Dell, which posted global revenue of US$15.7 billion in its last fiscal year, established manufacturing and service operations on the mainland in 1998, and now employs more than 7,000 local staff.