Acer Looks to Founder to Tap Chinese Market

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Acer, the world's second-largest PC vendor, signed a memo of understanding with Chinese IT company Founder Group on Thursday, aiming to expand its market share in the world's most populous country.

Under the agreement, Acer and Founder will jointly design IT products including notebooks, netbooks and mobile Internet devices, like Acer's newly announced LumiRead e-reader, for the Chinese market.

Acer's forays into the U.S. and European markets were facilitated by mergers and acquisitions, but both Acer and Founder stressed that the agreement announced Thursday is only focused on "business cooperation" and will not involve an exchange of shares or affect the independence of either brand.

Mergers and acquisitions were the only possibility in the U.S. and Europe, but partnership opportunities are more diverse in China, said Gianfranco Lanci, Acer's president and CEO, in response to questions about why Acer's strategy was different in China than in other markets.

Acer intends to use Founder's existing sales channels and after-sales service to expand in China. Acer said it had 5.9 percent share of the Chinese notebook market and 3.2 percent of its total PC market, ranking fifth and sixth in the segments, respectively. Founder also hopes to gain access to global markets through the partnership.

"In the next two years, China will be the largest PC market in the world and the fastest growing market in the world," said Acer Chairman J.T. Wang.

Wang admitted Acer hasn't been very successful in China, but said that support of the Chinese government and strategic partners like Founder, which has strong ties to the government and education sectors, would improve market share. Founder was established by Peking University, one of China's most prestigious universities in 1986. The company has has 24 regional distributors and 1,500 channel partners in China.

Wang spoke of improving relations between China and Taiwan and said that for Acer to compete with U.S. competitors, the company needs support in Mainland China. Taiwan and China separated in 1949 during a civil war between the Nationalist and Communist parties.

Acer and Founder intend to organize working groups in the next week to begin joint development work.

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