Dell China boost
Technology firm to boost China R&D prowess in quest for sustainable growth
Dell Inc plans to invest $125 billion over the next five years to expand its research and development team in China.
Dell Inc said it is investing $125 billion in China over the next five years to boost innovation and unlock the “unprecedented” demand for information technology products.
Michael Dell, founder, chairman and chief executive officer of the privately owned multinational computer technology company from the United States, pledged to further expand its research and development team in China. Dell set up its first unit in China two decades ago.
The investment will mainly go into research and development, supporting tech startups and other areas, the company said.
The Round Rock, Texasbased computer firm said the investment will make Dell a strong contender in the world’s biggest market for IT products, despite a slowing economy.
China is already providing a lot of business opportunities for Dell as the government has announced a series of initiatives to spur IT consumption, said Dell China President Huang Chenhong.
“All these trends are from before the next wave of Chinese economic development, and Dell wants to become a part of this new wave,” Huang told China Daily.
The investment came amid an economic slowdown in China. A weakening manufacturing sector and surging labor costs are forcing several overseas firms to move out of the country.
Huang said he is not worried that a weaker local economy will jeopardize Dell’s China business. “A 6 percent or 7 percent growth rate still indicates that China is a growth engine for the global economy.”
Dell, the world’s third-largest personal computer maker, has 65 percent of its global production in China. The company has three plants, two service centers and two R&D facilities in the country.
Gene Cao, a senior analyst at Forrester Research Inc, said the Dell investment answered Hewlett-Packard Co’s move of selling 51 percent of its stake in a local IT product subsidiary to a Stateowned enterprise for at least $2.5 billion in May.
“The investment largely focused on enterprise business, including hardware, software and service sectors,” Cao said.
A cash-rich China unit will help Dell take on local rivals such as Lenovo Group Ltd and Huawei Technologies Co Ltd, according to Cao.
Dell lags Lenovo in Chinese PC market in terms of market share, research firm International Data Corporation said, without giving exact statistics.
It is not clear if Dell will find it easier to secure deals in the financial sector as China has been tightening controls over IT products used in the sector for security reasons. Overseas enterprises are worried that such a move may keep them out of the lucrative market.
Huang from Dell said the company is working closely with the government and he does not consider Dell as an overseas enterprise because of its close ties with the local economy.
A 6 percent or 7 percent growth rate still indicates that China is a growth engine...” Huang Chenhong, China president, Dell Inc