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Dell expanding China presence via large retailers

(Agencies)
Updated: 2008-04-17 15:01

Dell is trying to regain the lead in worldwide PC shipments by branching out from its phone and Internet sales and going into retail stores. The strategy may be paying off.

Two technology research firms, IDC and Gartner Inc, reported Wednesday that Dell still trails Hewlett-Packard Co in worldwide shipments but gained ground in the first quarter.

HP says its machines are available in more than 81,000 stores.

In China, Dell is also competing with domestic market leader Lenovo Group.

Dell started selling machines at Gome, China's largest electronics chain, last year. Michael Tatelman, general manager of Dell's global consumer business, declined to give sales numbers but said the arrangement is working well enough to double it to 900 Gome stores this month.

With Gome and Suning, "These guys are the premium two, and they are pretty expansive, not only across the big cities but down into smaller cities as well," Tatelman said.

Dell believes that young Chinese consumers buying their first computer will prefer the superstore format of larger Gome and Suning locations to the country's hectic PC malls.

China is an increasingly important market to Dell. In its fiscal fourth quarter, Dell said, sales in the Asia-Pacific and Japan region rose 28 percent, offsetting more modest gains elsewhere.

There are downsides, however, to the retail approach. Although Dell doesn't break out figures, analysts say the company must share revenue with the retailers instead of keeping it all, as it does with its direct phone and Internet sales.

Dell also will increase spending for online marketing and in-store promotions at Gome and Suning, Tatelman said.

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