The Chinese Market Is Hard for Acer

Acer is one of the top laptop system manufacturers and vendors in the world and while it never made it to the first place in top, it has still a solid market position that looks as if it just got better in Europe and North America. And slided downhill in China.

As the Chinese computer market is one of the fastest growing and expanding markets in the world, most hardware manufacturers and vendors like Hewlett-Packard, Dell and Lenovo Group are actively seeking to carve a market niche for them and during this time they come out with steady profit growths. Well, things are different for Acer as its revenues from China dropped 16 percent during the first quarter of 2007, according to the news site InfoWorld.

Acer's declining market position in China could be the direct result of a price war for notebook PCs with the Asustek Computer company that own the Asus brand. According to the IDC market research company and its director of personal systems research, Bryan Ma, the price war started "in Taiwan during 2005 and spilled over into China in 2006". "They were just duking it out for a couple of quarters, flooding the market as much as they could," but in the end they lost the battle to Asus and had to cut back on shipments. "Part of that is because Asus has been quite successful at getting into the smaller cities. Acer on the other hand has been a bit more focused on the larger cities", the IDC analyst said. "Acer shipped 80,000 notebook PCs in China during the first quarter, down from 116,000 notebooks in the same period last year", Brian Ma said. "By comparison, Asus saw its first-quarter notebook shipments soar, from 114,000 units in 2006 to 173,000 units in 2007," according to InfoWorld.

Unlike the China situation, Acer is doing much better in all other areas, even closing to Lenovo's position as the world's third largest PC manufacturer and vendor. Acer's revenues from Europe, Middle East and Africa rose by 26 percent, while its sales in Asia, excluding China and Taiwan also rose by 26 percent. The best Acer market position is in the U.S., where the company's revenues jumped 60 percent during the first quarter of 2007. In the long term, as the Chinese market grows very fast and is influencing all markets around it, the companies that will be able to establish strong market positions in China will probably find it easier to dominate the entire Asian market. "If they are able to be successful in that market, it will help boost their global position," the IDC director said.