by CIO Staff

Dell to Stick With Direct Sales Model in China

Dec 19, 20062 mins

Is Dell ready to abandon its direct-sales model to boost its prospects in China? The company says no.

Several Chinese media outlets recently reported Dell is in talks to buy Chinese PC maker Founder Technology Group, citing a report by a Chinese newspaper, National Business Daily. The newspaper did not name its source and appears to have removed at least one related story, published on Dec. 15, from its website.

A Dell acquisition of Founder would leave the U.S. PC vendor with a nationwide network of retail shops in China, ending its long-standing reliance on direct sales.

Sharon Zhang, a spokeswoman for Dell China, declined to comment on the acquisition reports, but said the company has no plans to change its direct sales model. “We are committed to the direct sales model in China,” Zhang said.

Founder executives in Beijing could not be reached immediately for comment.

During 2005, Founder was the second-largest PC vendor in China with 12.3 percent of the market, according to industry analyst IDC. The company trailed Lenovo Group, which held 32.8 percent of the market, and managed to stay one step ahead of Dell, which was the largest foreign PC vendor in the country, with an 8.8 percent share of the market, IDC said.

While rumors of Dell’s interest circulate, Chinese media reported that at least one Chinese company is interested in Founder. The China Business News reported Monday that Haier was in talks to acquire Founder, citing an inside source at the consumer electronics and whitegoods producer based in Qingdao, northern China.

Haier could not be reached for comment.

-Sumner Lemon, IDG News Service (Singapore Bureau)

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