Dell To Spend $72B In China In An Effort To Beat HP

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With their own market in recession US online retailer Dell plans to buy $70 billion of components from China during the next 2 years. The deals come as the Company fights to deliver bottom line profits ahead of arch competitors like HP.

With their own market in recession US online retailer Dell plans to buy $70 billion of components from China during the next 2 years. The deals come as the Company fights to deliver bottom line profits ahead of arch competitors like HP.

According to Reuters the commoditisation of computer hardware means competition is more a function of price and efficiency than quality and branding, making China a favourite place to source a broad range of goods, including electronic components.

“China is critical to Dell’s global supply chain,” founder and Chief Executive Michael Dell said.

“Dell will purchase $70 billion of computer-related supplies and equipment from China,” he said, referring to total purchases over the 2007-2009 periods.

The world’s second-largest personal computer maker, Dell is far from alone in looking to China to reduce manufacturing costs and remain competitive.

 

Last November, Cisco Systems said it would almost double its purchasing from Chinese suppliers over five years to $16 billion. This also includes components for their Linksys division.

Cisco is the biggest maker of routers, switches and other equipment that make up the Internet.

According to Reuters hardware makers such as Dell, Cisco and Hewlett-Packard could be hit hard by a U.S. economic downturn, Dell even more so because it relies on the U.S. for about half of its revenue, a much higher proportion than larger rival HP.

For more on this story see Reuters

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