Dell to boost purchases from china

March 20 -- Dell Inc., the world's second-largest maker of personal computers, plans to boost purchases of components from Chinese suppliers by about 28 percent this year as the company increases its presence in its fastest-growing market.

Dell will buy $23 billion of computer parts from China, compared with $18 billion in 2007, Chief Executive Officer Michael Dell said at a press conference in Beijing today. ``Including last year, this year and expected purchases next year, Dell will purchase $70 billion worth of computer-related supplies and equipment from supplier partners in China.''

The PC maker plans to win customers from Chinese market leader Lenovo Group Ltd. as it expands outside the U.S. Dell estimates it will contribute more than $50 billion to the Asian nation's gross domestic product this year and ``support'' more than 2 million jobs, the statement said.

``Dell has been shifting more procurement to Asia to reduce costs and increase flexibility, and this trend has been going on for a time,'' said Ellen Tseng, an analyst at Nomura Securities in Taipei.

China's growing wealth is fueling demand for electronic products. The country's economy expanded 11.4 percent in 2007, the fastest pace in 13 years. The nation's retail sales rose 16.8 percent last year, driven by incomes that climbed 17.2 percent in urban areas and 15.4 percent in rural areas.

Dell in October started selling computers in fewer than 100 stores in China through Gome Electrical Appliance Holdings Ltd. The U.S. company plans to expand its presence to 1,200 cities in the nation this year from 45 at the end of last year, Amit Midha, the PC maker's greater China president, said at the presser.

`Growing Rapidly'

``We've become the third-largest computer-systems company in China, and are growing rapidly,'' Dell said in the statement. ``Dell will continue to play a key role in China in the `connected era.'''

The company needs to expand its distribution and improve product design to challenge Lenovo in the consumer and small- business markets, said Bryan Ma, an analyst at research company IDC in Singapore.

``In China, Dell's strength is in the large-enterprise market, and this should continue,'' Ma said.

Lenovo had a 28.8 percent share of the China market in the quarter ended Dec. 31. Dell trailed at fourth place with 7.9 percent, behind Hewlett-Packard Co. and Founder Technology Group Corp., according to IDC.

(Bloomberg)