The mainland's largest IT product distributor, Digital China, plans to further expand its distribution network in the country's small- and medium-sized cities, where there is increasing demand.

"In the remainder of 2006-07, we will establish 30 to 50 distribution points in the mainland's small cities," said Lin Yang, Digital China's executive vice-president.

Digital China has three major distribution centres in Beijing, Shanghai and Guangzhou and 10 distribution points in 10 provinces and capital cities. To further strengthen its coverage in third- and fourth-tier cities, Digital China added 29 cities into its distribution network in 2005-06. Its total number of resellers reached 8,225 on the mainland, representing a year-on-year growth of 35 per cent.

"Our distribution business has had good market penetration in China's first- and second-tier cities, but with the third- and fourth-tier cities there is still a big potential for us to further explore," Lin said.

As the world's third-largest IT service provider, just behind IBM and Hewlett-Packard, Digital China saw its total turnover surge to HK$19.8 billion (US$2.54 billion) in the fiscal year ended 31 March 2006, an increase of 28.5 per cent year-on-year. Its net profit jumped by 35.3 per cent up to HK$252 million (US$32 million), the company said yesterday.

Its core business, the distribution of IT equipment, generated a turnover of HK$11.6 billion (US$1.49 billion), 33.3 per cent up from the previous year. The turnover from the sector grew most remarkably in the fourth quarter of the year to HK$3.04 billion, an increase of 51.7 per cent from the corresponding period of the previous year.

"Turnover from desktops and laptops contributed most to the total turnover of the company's distribution business," said Lin, who told reporters yesterday that in the fourth quarter of the year alone turnover from the two grew by 316.9 per cent and 64.4 per cent respectively.

(For more biz stories, please visit Industry Updates)