For now, the mainland's robust PC market is split evenly among foreign brands, local brands and non-branded clone PCs. But domestic brands, due to government support, lower production costs and better distribution networks, are expected to dominate the market by 2002.
Yang Yuanqing, vice-president of Legend Group - China's top PC-maker - believes that by 2000 mainland brands will command about 60 per cent of the market, with the rest going to foreign brands and clones.
His reasoning? The government is keen to foster a domestic hi-tech industry, with PCs as the centrepiece. This year alone, the Ministry of Electronics Industry has issued more than 170 certificates to companies wanting to build PCs. Officials also are providing five brands - Legend, Founder, Great Wall, Tontru and Langchao - with priority support.
The boom is evident. International Data Corp expects three million PCs, worth US$4.2 billion, to be sold this year, up about 40 per cent on last year. PC sales could total about 60 per cent of the IT market.
Nevertheless, PC research manager at IDC Asia-Pacific Dale Anderson said: 'Clone PC-makers will continue to do well.' He believes they will be able to survive at lower margins because their manufacturing costs are small, due to smuggled components and pirate software. By selling directly to customers, the cloners avoid heavy distribution costs.
Clone PCs were about 25 per cent cheaper than local brands, and roughly 30 per cent cheaper than foreign brands, Mr Anderson said.