Dell surges ahead in China

Dell Computer has passed IBM as China's largest foreign PC seller for the first time since it began selling computers in the...

Dell Computer has passed IBM as China's largest foreign PC seller for the first time since it began selling computers in the Chinese mainland in 1998.

Dell's shift in focus toward the consumer market has contributed to increasing sales, said Davina Yeo, manager of personal systems at IDC Asia-Pacific. "Dell has gained additional market share from moving into the consumer space," she said.

"Their direct sales model is also attractive to the larger corporates since it eliminates OEMs or middlemen," Yeo continued, adding that the importance Chinese companies place on "guanxi" or relationships between business partners makes Dell's direct sales formula successful in China.

According to IDC, foreign competition in the PC market in China is a "close game" although Dell is definitely increasing its market share through aggressive pricing. "It's now a level playing field with the local vendors," Yeo said, adding that Dell is doing rather well even though it has penetrated only the tier one, or larger Chinese cities."

However, Chinese PC makers Legend Holdings, would always have the lion's share of the market. "Legend has a much larger reach... they are everywhere including more remote, second and third-tier cities," she said. "But Dell has said they would make China their main market, so I'm sure they have plans to move towards the smaller cities, and will continue to gain market share."

The weakening of the other established foreign PC manufacturers have also allowed Dell to edge its way up against competition in China. "Compaq has been slipping in China, and HP's advantage in the service space is diminishing," said Yeo, adding that Dell also offers service and support rivalling its competition.

At the end of the third quarter this year, Dell led foreign PC shipments at 113,669 units sold compared to former foreign market leader IBM shipping 94,153 units, according to IDC figures. Legend Holdings continued its leadership with 727,658 units shipped, holding almost 32% of the total 2.3m units sold in China last quarter, IDC said.

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