It is a wet morning in Old Shanghai, and Dell salesman Peter Chan is selling hard. As the Yangtze River flows by the Bund district a few floors below, Chan is getting into a flow of his own. His subject: computers and the unique benefits of Dell's direct-selling model. His customer: Xiao Jian Yi, deputy general Manager of China Pacific Insurance, a fast-growing state-owned insurance company. The audience: three of Xiao's subordinates.
Dell's aggressiveness is beginning to payoff. Not only did Dell reel in the China Pacific account, but it is also becoming a major player in China. In 1998, 36-year-old billionaire Michael Dell opened the fourth Dell PC factory in the world in Ziamen, a windswept city halfway between Hong Kong and Shanghai in China's southeastern coast. The point of Dell's push into China seems so obvious as to be a cliché: China is becoming too big a PC market for Dell, or anyone, to ignore. "If we're not in what will soon be the second biggest PC market in the world," asks John Legere, president of Dell Asia-Pacific, "then how can Dell possibly be a global player?"
Though the competition is intense, Dell is confident it has a strategy that will pay off. First, it has decided not to target retail buyers, who account for only about 10 per cent of Dell's China sales. That way Dell avoids going head-to-head against entrenched local market leaders like Legend. "It takes nearly two years of a person's savings to buy a PC in China," notes Mary Ma, the chief financial officer of Legend. "And when two years of savings is at stake, the whole family wants to come out to a store to touch and try the machine." Dell just is not set up to make that kind of sale yet.
One thing is for sure: the Dell model is working in China. As long as China's PC market continues to grow, Dell is ready to grow with it. 1