HP Denies China Direct Retailing Plans
On a visit to Beijing, HP chief executive Carly Fiorina
denied a story that the company planned to open 1,000
retail outlets in 100 Chinese cities. Instead, the company
would focus on partnering to get HP-branded iPods, digital
cameras, projectors and home entertainment systems into
retail stores by the end of the year.
China Business Weekly, a major domestic publication,
had reported last week that HP was planning to open 1,000
retail outlets in the country to increase its presence.
The claim was made by HP China executive vice-president
Ken Koo in an interview.
The corrected story is that more than 1,000 stores will
carry HP branding through partnerships, and all of the
shops will be owned by the partners. Some partners will
be authorized resellers, while others will sell a range
of products in a special retail space to be known as HP
Corner.
Carly Fiorina said that it was HP's aim to be a major
technology supplier in China, and that this could not
be done without a presence in China.
All PC makers are attempting to branch out of the PC
business, where margins are razor-thin. In HP's case,
their most recent advertising has positioned their products
as creative tools for artists, featuring digital imaging
and music appliances. This approach was initially pioneered
by Apple, which has continued to maintain a strong and
loyal presence among creative types. Lately, Apple has
shown early signs of breaking out of this segment with
its iPod, and iTunes online music store, which have been
successful in the US.
Because China's consumer market is booming, and everybody
wants in, it is now the most cutthroat market in an already
cutthroat business.
Whether this re-branding strategy will work in China
is debatable. Apple, because of its premium pricing, never
had a strong presence in China. The iPod is still considered
by many Chinese to be expensive, even though it can be
easily afforded by China's urban younger folk.
And the idea of buying music online in China? Well....
But the iPod as a fashion statement has a certain appeal
to the right market.
A strong China presence for HP will put further pressure
on China's Legend,
which is fighting it out with Dell for the Chinese domestic
market. Recently Legend, as part of a reorganization,
laid off 5 percent of its workforce.
If there is one thing which can be said about the PC
market, it's that nobody is happy being positioned as
a PC company aside from Dell, which is comfortably profitable
making commodity products.
And especially so in China.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
