Dell Plans 'Significant Investment' in China

Dell will make significant investments in China to beef up the company's regional presence, CEO Michael Dell said Friday.

Calling China one of the world's fastest-growing economies, Dell said his company would purchase US$70 billion of hardware components from Chinese companies between last year and next year. In 2006, Dell purchased about $18 billion in technology components and related products from suppliers in China.

Dell officials have stressed the importance of emerging markets like China and India for sustained growth. Dell last year signed up Chinese consumer electronics retailer Gome to sell its PCs. For the fourth quarter of 2008, the company reported a 36 percent rise in combined sales in the emerging economies of Brazil, Russia, India and China, compared to a 17 percent increase in sales in the U.S.

Dell has about 6,000 employees in China and has had a presence there since 1998.

The company will also invest 1.7 million Chinese renminbi (US$242,000) in Dell Learning Centers to provide Internet access to children in rural China. The investment is part of the company's educational commitment to China, Dell said.

China has low PC penetration, which translates to a big market opportunity for Dell, said David Daoud, IDC research manager. That could evolve even more if telecom issues are addressed and Internet connectivity increases.

For Dell to succeed, it needs to launch low-cost PCs and adapt its products for a Chinese market that cannot afford PCs, Daoud said. With its retail strategy in place now, the company is in a better position to deliver products, he said.