Dell Looking to China, Emerging Markets for Growth

China sales up 33%

Dell said on Oct. 22 it would increase investment in emerging markets, and China in particular, so it can continue to grow as the world economy slows. Demand for Dell products in China has continued to rise despite the weakening global economy, with sales up 33% year-on-year in the second quarter, the firm said at a briefing in Shanghai. "China is one of the most critical emerging countries in the world," Michael Dell, CEO said.

The IT sector in the country of 1.3 billion provided plenty of opportunities to grow, he said. "It's still at the very early stages of evolution," Dell said. "You have vast parts of China that have not taken advantage of IT tools, huge numbers of people coming on line and great opportunities to increase productivity and modernise infrastructure."

He said emerging markets would be key to the company's effort to continue growing faster than the industry average, along with developing mobile computing products and helping companies cut costs during tough times.

Company officials would not provide further figures on Dell's China sales or revenue but said the second quarter increase reflected new partnerships with eight major retailers in China as well as about 2,500 new Dell retail outlets. The company has set up 155 small business sales centers in China since mid-2007 and plans to increase that number to 1,500 by mid 2009.

Dell, known for its pioneering direct sales model, generates $12 billion through its other sales channels, the company's chief said.

The firm's shipments in Asia-Pacific increased 35% in the third quarter, nearly three times faster than the industry average of 12%, according preliminary figures compiled by technology analysts IDC. Lenovo and Hewlett Packard are the market leaders in Asia-Pacific, with 18.9% and 14.5%respectively, according to IDC. Dell is third with 9%.

Dell warned rising costs -- in part due to labour and the rising yuan -- would push production away from China's coastal regions. "You'll see the manufacturing resources we rely on move inland absolutely and also move to other countries to keep the costs competitive," he said, mentioning Vietnam as one such country. "There is no question we will be driving that trend to keep costs at a competitive level," he said.

Dell said his company's conservative management, cost cutting and a strong balance sheet would help it ride out the financial storm. "If you look at history, we know things will return to normal. We don't know when that's going to be, but we know it's going to take time," he said. The company's financial position was strong with $10 billion in cash and investments, he added.

Businesses and institutions account for 80% of Dell's business in the Asia-Pacific region, while 99% of the region's Fortune 500 companies are Dell customers, he said.

Copyright Agence France-Presse, 2008

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