Dell Gambles In China So As To Thwart Lenovo

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Dell is expanding its presence in China by cutting a distribution deal with Suning, the country’s second-largest electronics chain as well as doubling the number of Gome stores that carry Dell, a move that will put Dell computers in more than 12,000 stores across the world and that will also challenge Lenovo in China, the domestic market leader.


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Dell started selling machines at Gome, China’s largest electronics chain, last year and the company is gambling on the notion that Chinese consumers prefer the superstore format of the larger Gome and Suning locations to the country’s bustling PC malls. The company also previously noted that “99 per cent of the economic value in China is in the large metro areas”.


In line with this expansion, Dell also will increase its spending for online marketing and in-store promotions at Gome and Suning.


Some analysts say this is a gamble for Dell as it must share any revenue with the retailers instead of keeping it all, unlike the profits coming from its phone and Internet sales.


However, analysts have pointed out that the company’s previous forays into retail distribution, both in the U.S. and in China ended in tears for all concerned. So if the company hopes to dominate in China, it may be forced to play outside of its comfort zone — at least for a while.

 


 

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