Dell to Push New Models to China, India

Dell says it plans to develop new computer models specifically for the Chinese and Indian markets...and buy more than $50 billion in Chinese components through 2009.

At a news conference yesterday celebrating ten years of operating in China, Dell CEO Michael Dell said his company plans to significantly increase its presence in China’s and India’s rapidly-expanding personal computer markets, and part of the company’s efforts will include developing new models specifically for those regions. Dell also said his company plans to source more than $50 billion in components from China, including $23 billion in this year and $29 billion in 2009.

At the news conference, Dell indicated that its sales of consumer PCs in China grew by 54 percent last year, a number that was more than three times greater than the industry average of 17 percent. Dell says it accounts for about 18 percent of China’s PC market in terms of revenue, and 10 percent of the Chinese market in terms of units sold.

Dell’s numbers in China have been bolstered by a recent partnership with Chinese retailer Gome; Dell plans to extend its retail offerings in China to some 1,200 cities by the end of 2008—a massive increase from the 45 cities where Dell currently has a retail presence—and supplement those offerings with new products unique to the Chinese market.

Dell currently operates two manufacturing facilities in southeastern China, along with a design center in Shanghai.

CEO Michael Dell also indicated China is crucial to Dell’s global supply chain, and said the company plans to source more than $50 billion in parts and components from Chinese manufacturers, including $23 billion in gear this year, and $29 billion in 2009.

Dell is not alone in sourcing parts and components from Chinese manufacturers, and an increasing number of U.S. technology firms are sourcing commodity items from Chinese makers in an effort to reduce costs and keep their products competitive as their core U.S. markets look to reduce expenditures and weather a potential recession.

Industry watchers tag Dell as particularly sensitive to fluctuations in the U.S. economy, since about half its reveue comes from the United States. Although Dell has recently lost its top-dog computer maker status to HP, the company’s moves to embrace Asian markets and bring down manufacturing costs may help it weather any economic downturn in the United States.