Dell faces exodus of China executives
(China Daily)
Updated: 2006-08-17 08:31  "Dell's notebook growth, in fact, is part of an industry-wide boom,"
said Li Chong, an analyst with Analysys International.
"Dell is facing hiccups in China due to the inadequate localization of its
direct-business model."
Dell has been successful in implementing its customer-focused direct model in
many countries, but such a practice has not been well received in China, Li
said.
Unlike US consumers, Chinese are usually reluctant to open their wallets if
they cannot experience the consumer products they wish to buy.
Dell China executives have been trying to diversify the model by bringing in
distributors and resellers.
This may have caused disagreement between Dell China and its US headquarters,
which could partly explain the exodus of its top executives in China, Li said.
Lenovo has taken on Dell since it acquired IBM's PC-making business, learning
from the US firm's direct model to cut costs.
"Lenovo is now taking a diverse approach to China's PC market, which is
geographically complicated. But Dell is still insisting on the purity of its
direct model," Li said.
Dell's woes are in stark contrast to rival Hewlett-Packard, which has
successfully introduced both a distribution system and a direct selling model to
its China operation.
HP China has managed to grow both its notebook and desktop shipment in the
second quarter.
But Steve Felice, president of Dell Asia-Pacific and Japan, defended Dell's
direct model.
"We are growing strongly and profitably, because more and more customers in
China are recognizing the superior value of direct relationships with Dell," he
said.
(China Daily 08/17/2006 page10)
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