Dell ventures into countryside with lower-priced computers

Dell Inc, the world's second largest maker of computers after Hewlett Packard (HP), is eyeing China's rural computer market.

The ministries of finance and commerce released a list of bid winners for the mainland's rural computer subsidy program on March 5, which included Dell, as well as 13 other brands such as HP, Acer, Lenovo, Haier and Hasee.

These computer manufacturers will provide 183 models for the program, each lower in price than 3,500 yuan ($511).

Steve Felice, president of Dell Asia-Pacific, said Dell had designed and prepared products for the four-year long rural program even before it heard about the bid's outcome.

Dell has increased its presence in China last year, grabbing an 8.5 percent of Chinese PC market share, according Gartner, a market research company.

"Dell's sales volume in retail channels (which includes domestic electronic retailer Gome) has exceeded that of direct channels," said Yang Chao, general manager of Dell's greater China's consumer service.

But Dell is a newcomer (having done only a few pilot programs) in China's rural market, where other computer makers have already made inroads.

Domestic computer maker Lenovo has been working to expand its reach to county and villages since 2004 and currently holds 42.4 percent of China's rural computer market.

Lenovo said it aims to sell 5 million computers in the rural market over the next three years.

Founder, another Chinese computer maker, has also been expanding into rural areas since 2004 and now has 5,000 shops in towns and villages.

Shen Tao, spokesman of Dell, declined to give Dell's rural market share in China.

A businessman identified as Hu, who operates a computer store in Lichuan county, Jiangxi province, said he sold about 800 Lenovo and Founder computers over the last three years.

"Lenovo and Founder have good influence here," said Hu. "They can provide door to door services. I have never sold Dell."

There are 84.6 million rural Internet users in China (accounting for 28.4 percent of all netizens), according to the China Internet Network Information Center.

In a recent survey conducted by CCTV, 40.2 percent of rural residents said a computer was the modern electrical appliance they wanted most.

The average per capita net income for China's 727.5 million rural residents is 4,761 yuan according to the National Bureau of Statistics.

(China Daily 03/30/2009 page8)