The biggest challenge they face is fiercer competition from foreign rivals next year.
Shanghai. December 22. INTERFAX-CHINA - Chinese computer manufacturers are adjusting their strategies in order to reduce the impact of shrinking market demand, although industry analysts have warned that fiercer competition from foreign rivals will put them under even greater pressure in 2009.
"Chinese computer manufacturers feel threatened as domestic demand has slackened. However, the biggest challenge they face is fiercer competition from foreign rivals next year, since the global financial crisis has forced foreign companies to focus more on emerging markets such as China," Chen Meifeng, an industry analyst with Haitong Securities, said.
Chen said foreign computer manufacturers are increasing their market shares in China. According to IDC figures released earlier this year, Hewlett-Packard Company (HP) was second in China in 2007 with a market share of 10.7 percent. By comparison, the top three companies by market share in China in 2004 were all Chinese. Dell reported that its PC shipments in China increased by 38 percent year-on-year in its second financial reporting period from May to July this year.
Although China's PC market is expected to grow by 10 percent in 2008, this will be its slowest year-on-year growth since 2003, market research firm IDC said in a report released in September. Shipments for the first half of 2008, put at 19.54 million units and representing a 19 percent year-on year growth, are expected to tail off for the second half of the year, the report said.
Recently, a number of Chinese PC manufacturers revealed their strategies for 2009, through which they hope to minimize the impact of weakening market demand.
China's largest PC manufacturer, Lenovo Group, announced that it is re-branding its PC products. From Jan. 1, 2009, the company will merge its two desktop brands, Kaitian and ThinkCenter, into a new desktop brand named "ThinkCenter M," targeting medium and high-end corporate clients, which will come under its wider brand "Think." On Dec. 19, Lenovo launched the first batch of computers under the new brand. The company also confirmed on Dec. 11 that it is seeking to acquire a potential target company, however, it revealed no further details.
Founder Technology Group Corp., one of the largest Chinese PC manufacturers, revealed on Dec. 16 that it will shift its focus from desktop PCs to laptops in 2009 and will enhance brand-building in rural areas, universities and colleges. Founder has already invested more than RMB 200 million ($29.21 million) this year in setting up sales outlets in rural areas and in its advertising campaign targeting 18 to 25 year-olds.
An official with Tsinghua Tongfang, a leading Chinese desktop PC manufacturer, told China Electronics News earlier this year that it would focus more on producing desktop computers that have 3C (computer, communication and consumer electronics) convergence features, and will launch several such models in 2009.
China Great Wall Computer Group Co. Ltd. announced at its 22nd anniversary ceremony held in Beijing on Dec. 13 that it would focus on strengthening its "Great Wall" brand for its computers by setting up separate brand management departments for its laptop and desktop businesses. "We will shift our focus from the domestic market to emerging markets in South America and Southeast Asia in 2009," Zhou Gengshen, the company's president, said. According to Zhou, overseas sales account for approximately one-third of the company's annual revenue.
"The trend for computer makers will be 3C, and competition in this area will grow," Tong Weiqin, a computer science professor at Shanghai University, said.
Liu Buchen, an independent industry observer, said that the rural market will be a new battle field for computer manufacturers in 2009, as the Chinese government is planning to include computers in its program to offer discounted household electronic products to rural residents. However, even here, domestic manufacturers will feel the pinch from their overseas rivals.
"Foreign computer manufacturers are eying rural markets - an area that was once dominated by Chinese companies - as well as cities," Chen of Haitong Securities said. He gave HP's recent launch of a manufacturing plant in Chongqing Municipality as an example of a foreign manufacturer targeting China's more rural western regions.
China's second largest online game exporter, Suzhou Snail Electronic Co. Ltd. (Snail Game), is expanding overseas into the world's most developed gaming markets with confidence in its ability to compete on both technology and innovation.
