14 DAY TRIAL // System integrator Dell has announced that the company intends to buy $23 billion of components from China this year, and other $29 billion in 2009. According to the company, switching supply markets will help Dell to keep down on raw materials spendings. The company broke the news during the celebration of the 10th year of operations in China.
China is one of the favorite supply markets worldwide, given the fact that China's electronics market is working on a commodity basis, where high profit is achieved by selling tremendous quantities of goods at a minimal price over the manufacturing costs.
According to Michael Dell, the company's chief executive officer and co-founder, the system integrator will spend $70 billion in computer-related supplies and other hardware equipment until 2009. The company started buying electronics-related components in 2007. "China is critical to Dell's global supply chain," claimed Dell.
However, Dell is not the only PC vendor to pitch at the Chinese electronics market. Cisco is also buying Chinese semiconductors and last November it announced that it would almost double its purchasing from Chinese suppliers in a five-year timeframe, to $16 billion.
Major hardware manufacturers such as Cisco, Dell and Hewlett-Packard are suffering from the recent regression on the United States market, but Dell is especially affected, since it draws almost half of its revenue from the US market sales.
"China is one of the most dynamic and fastest-growing economies in the world, and we've made significant business and social investments here in the past 10 years," continued Michael Dell.
According to the company, Dell opened two manufacturing units in the south area of the country, a sales support center in the north east, that serves Dell's customers across Japan and Korea, and a design facility, which is also Dell's biggest unit of its kind.