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China a great wall for local hardware firms

Bipin Chandran

China will not be an easy market for Indian hardware companies and their chances of success seem impossible.

According to Manufacturers Association of Information Technology, the association of Indian hardware companies, Chinese firms are well poised to become the third largest producer of computer hardware in the world.

"The Chinese market would be tough for Indian companies, though the market is huge and poised to grow faster.

"The main reason for this is the market reach that the Chinese companies have. Even multinationals which have invested heavily in China are yet to generate cash profits," Vinnie Mehta, director, Mait, said. He recently visited China to study the hardware market.

According to him, "Indian hardware companies should instead collaborate with Chinese companies and try go to the US and European markets. The Indian companies should also try to acquire technological skills from Chinese companies."

He also suggested that local firms work as contract manufacturers for Chinese companies which are looking at accessing the international market. "Besides, Chinese hardware companies can look at tapping India's software talent," Mehta said.

China's PC sales are expected to be the world's second largest by 2003.

In 2001, companies in China sold 8.79 million PCs. China's largest PC maker is Legend with about 31 per cent market share. Incidentally, the overall PC sales in India is lower than Legend's sales in China.

While no Chinese company has firmed up plans of setting up manufacturing units or establishing a marketing presence in India, Mehta said Chinese companies can pose a threat to Indian hardware companies if they decide to enter India.

Chinese telecom manufacturing companies such as ZTE, which has a manufacturing joint venture in India with UTL, is looking at setting up a research and development centre and a training facility in Bangalore.

ZTE is already supplying telecom equipment to telecom companies such as BSNL, Bharti and Reliance.

The Chinese computer industry generated revenues of $46.1 billion in 2001, representing an increase of 36.8 per cent over 2000.

Hardware exports from China crossed $21.4 billion in 2000 and this constitutes over 10 per cent of the overall exports from China.

Hardware exports from China is also expected to grow over 30 per cent in 2001.

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