Dell Spells Success in China

Other players (like Legend) in the market gave considerable attention to personal relationships in business dealings and as a result, they were a huge hit with individual buyers. Apart from the social aspect of doing business in China, Dell also had to deal with corruption in the country. In addition, it had to contend with hostility (due to political and nationalistic concerns) of many of the Chinese people it dealt with. For an average Chinese, buying a PC was a crucial decision, taken only after careful evaluation of all options and after considering suggestions from family members. Not surprising, considering the fact that the cost of a PC was equal to two year's (average individual) savings in China...

Although overall computer shipments to China had decreased in 2001 (by 48% in first quarter, 28% in second quarter and 13% in third quarter), Dell had continued to grow at a steady pace. By the beginning of 2002, Dell had emerged as the number one international player in China, leaving behind players like Compaq and IBM. Dell grew faster than Legend during this period; its profits were soaring while Legend's were declining. Dell's gross margins were reportedly 50% higher than those of Legend. In 2001, its net profit margin was 17.6% while Legend's was 13.9%. Legend was trying to compete with Dell by Dell grew faster than Legend during this period; its profits were soaring while Legend's were declining. Dell's gross margins were reportedly 50% higher than those of Legend...