By Wang Xing (China Daily)
Updated: 2007-12-01 07:14

The world's second-largest PC maker Dell Inc plans to boost its presence in China's smaller cities to take on rivals Hewlett-Packard, Lenovo and Acer.

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The company will expand to 1,000 Chinese cities from the current 45, Steve Felice, president of Dell, Asia-Pacific and Japan, said on Friday.

"Most recently, we've seen a propensity to move up dramatically in the fourth-, fifth- and sixth-tier cities (in China)," he said.

"Some of that will be done through continued expansion of our direct sales model and some of that will be done through increased partnerships," he said, without giving a specific timeframe for the expansion.

He also said Dell is considering turning its existing customer experience centers into retail outlets.

Dell has partnered with Gome Electrical Appliances to sell PCs in the retailer's 120 outlets in China.

But the country's largest electrical retailer contributes only "a very small part" of Dell's revenue in China, said Sharon Zhang, a press officer with Dell China.

Felice said Dell's cooperation with Gome is still "at the early stage". He said Dell is in talks with other partners in Asia Pacific to expand its reach.

Dell's share price dropped 10 percent after the company released a lower-than-expected third-quarter result on Thursday, with year-on-year revenue growth of 9 percent but a 6 percent income drop in its US consumer business.

The company's shipment increased 26 percent in the third quarter in China, 30 percent in Brazil and 42 percent in India.

Dell's relatively low growth rate in China is due to its larger business base in the country, said Felice.

According to research house IDC, Dell is Asia's third-largest computer seller, with an 8.8 percent share in the third quarter, behind HP and Lenovo.

In June, Dell said it would "go beyond" its direct sales model by selling PCs in retail outlets.

The company has teamed up with Wal-Mart in North America, Gome in China and Carrefour SA in Europe to sell its products.

Dell could face fiercer competition in the US and European markets as Asian rivals like Lenovo and Acer race to expand in the global market.