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CCID Consulting: 'PCs to the Countryside' Program May Boost China's Sluggish Desktop PC Market

Posted on: Monday, 12 January 2009, 07:00 CST

BEIJING, Jan. 12 /PRNewswire-Asia/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently discussed how the "PCs to the Countryside" Program would help China's sluggish desktop PC market rebound.

China's desktop PC market had a sluggish year in 2008, with CCID Consulting's statistics showing significant drops in first 3 quarters. Sales volume reached 16.682 million sets, up by 8.2% year-on-year, while sales revenues stood at 64.12 billion Yuan, up only by 1.2% year-on-year. The Notebook PC market continued to boom and took away market share from desktop PCs. Affected by soaring labor and raw material prices, domestic vendors generally experienced a drop in profits. Under the strong impact of international brands, domestic brands that mainly depend on desktop PCs faced a harsher environment. The adverse effect of the financial crisis on the desktop PC market also gradually appeared, making it difficult to rejuvenate the market within the year. It is forecasted that desktop PC sales in Q4 will reach 5.993 million sets, up by 6.3% year-on-year.

Fig. 1: Sales Volume/Sales Revenues in China's Desktop PC Market in 2008 Q1-Q3 and Forecast for 2008 Q4

http://www.ccidconsulting.com/upload/14116.jpg

Source: CCID Consulting, December 2008

Amid gloomy outlook, for desktop PC vendors there have never been more pressing need to seize business opportunities and open up new markets in 2009.

Following the "Home Appliances to the Countryside" program, a state initiative to promote sales of electronics products in China's rural areas though subsidies, another fiscal subsidy program supporting "PCs to the Countryside" is now being formulated, and is expected to involve 100 million Yuan in the form of a 13% direct subsidy to rural residents. If implemented, it will provide a strong stimulant to the sluggish PC market, thus pushing up overall sales in the desktop PC market.

A deep exploration of the rural market will be a good measure for desktop PC vendors to cope with the "IT winter". In the face of intensified competitions and narrowing survival space in Tier-1, -2 and -3 cities, an increasing number of PC vendors have cast their eyes on the promising rural market. Vendors like Lenovo and Haier have paid attention to the rural market for a long time. A few years ago, Lenovo extended its channel networks to Tier -4 and -5 cities and even county-level cities. It also staged a particular large-scale promotional activity called "1,000 County Tour" to strengthen its brand influence in county-level cities. For its part, Haier made full use of the advantages of its home appliance channels and set the rural market as a key area for development. In competing for rural markets, international vendors such as HP and Dell are not willing to fall behind Lenovo, thus competitions will be further intensified in 2009.

The vast rural market may look very promising. But, in addition to channel expansion, another urgent problem that all major PC vendors need to address next is how to truly seize the demand in the rural market and introduce corresponding after-sales services.

Firstly, PC vendors need to develop products for rural areas. To be included in the "PCs to the Countryside" program, PC products must meet the rural needs. Performance is not a key factor. What's more important is that vendors need to consider rural users' special needs and start with applications to solve farmers' most urgent problems. For example, many rural users buy a PC not just for entertainment but for getting more external resources for use in their agricultural production. This requires the integration of integrated Internet access solutions into PCs to help rural users to get more agricultural production information. In addition, rural users still have only an elementary understanding of computers. Vendors must develop products that target these users that are more easy to use.

Secondly, vendors must develop after-sales services, especially for software problems, such as virus and system recovery. For urban users, these are not difficult problems. But for farmers, these are not easy to solve. In addition, sending faulty PCs for repair is a difficult thing for farmers. Vendors need to take into consideration whether their service networks cover remote rural regions, and how rapidly can they respond to a crisis over a dispersed area.

About CCID Consulting

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: 8235.HK), is directly affiliated with China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu, with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China.

Based on major areas of competitiveness: industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrading, development strategy and planning, marketing strategy and research, HR management, IT programming and management. CCID Consulting's customers range from industrial users in electronics, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming the No. 1 advisor for enterprise management, the No. 1 consultancy for government decisions and the No. 1 brand for informatization consulting.

SOURCE CCID Consulting Co., Ltd.

Source: PR Newswire

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