dell.gifDell expects domestic production for China's PC market to increase 30% a year
in the short-term and it might add another factory in three to four
years, according to a China-based Dell executive quoted by China Daily.

The PC giant opened its second Chinese factory last year — see this EngagingChina story

In the fiscal third quarter of 2006, Dell reported a 33% growth in
the number of computers it made and sold in China – roughly double the
pace of China's overall market growth.

In China, Dell is the fastest-growing player and in less than a
decade it has grown to be third-largest PC vendor with a 10% share,
behind home-grown Lenovo, which has more than a third of the domestic
market, and Founder Technology.

Dell is now creeping up on the local heroes. Long the leader in
China, Lenovo “appears to be losing steam in its core market”,
according to one industry analyst quoted in this AP story.

Dell's success in China contrasts with its overall performance as it
has recently lost the number one spot to arch-rival HP. The company's
much-revered direct sales model appears to be losing traction and Dell
said earlier this month that it expected its quarterly results to miss
analysts' forecasts.

The company's founder Michael Dell has stepped back into the hot seat, replacing Kevin Rollins as chief executive.

Lenovo also has problems, particularly in the US. Despite its
$1.75bn purchase of IBM's PC business in 2004, it still is not taken
seriously in the highly competitive US market.

“The situation in North America is the cause of greatest concern,” Mary Ma, the company's chief financial officer told financial analysts recently.

The biggest problem continues to be the company's name, which is not
widely known in the US — or, indeed, anywhere else outside of China.
In a bid to boost brand awareness, Lenovo has signed high-profile
sponsorship deals with the NBA, Olympic Winter Games and US football

And in another strategy to bolster its image, Lenovo announced this week that it will sell ThinkPads through nearly 700 Circuit City stores. It already has deals with Best Buy and Office Depot.

The company has also had challenges trying to fuse together the very
distinct US and Chinese business cultures. To help in this task it has
just hired a Dell executive to help integrate the workplace culture.

Yolanda Conyers has been named
vice president for cultural integration and diversity. At Dell, she led
the supply chain strategy team and prior to that, she served as
director of global diversity.

More on Lenovo's woes in this earlier story.

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