Ruey-bin Kao, Hewlett-Packard Co's managing director for China, speaks at an event in Beijing celebrating Hewlett-Packard's 25th anniversary in China. [Photo / Bloomberg]

Firm eyes rural market, to build major service center in nation

BEIJING - Hewlett-Packard Co Ltd will build one of its biggest service centers and continue investing in the Chinese market, Ruey-bin Kao, the company's new chief in China, said on Wednesday in Beijing.

Kao, former president of Motorola China, said he was very ambitious about HP's development in China.

"The very first thing I will do after joining HP is to find two offices which are larger than 10,000 square meters for HP's expansion in China," said Kao.

About 64 percent of HP's business is outside the United States in more than 170 countries and regions.

According to Kao, China plays an important role in HP's global market, where it will build its largest and most vital outsourcing center out of a total of six global centers next year.

"China's outsourcing and software service is only half of the world average," said Wang Jiping, manager of research firm IDC China.

He said 70 percent of sales revenue in China's IT industry comes from hardware.

"HP is following the general trend in which hardware PC companies are providing more software and outsourcing services in China," Wang said. "In this industry, China has a huge potential."

Besides the service centers, HP will widen its PC portfolio and enhance distribution channels in China next year.

According to earlier data released by IDC, due to quality scandals, HP's market share dropped from second to third place in China during the second quarter. "Next year, we will rebuild our brand and provide better PC services in China to win our customers back," said Kao.

"We will launch our Palm handset and tablet PC products in China next year," Isaiah Cheung, vice-president of HP, said.

Kao also said the company is cooperating with two major telecom companies in China to develop cloud computing.

The company is going to combine its commercial and personal PC supply chain, which will share the same distribution channel.

According to IDC, PC sales in China will reach 65.14 million units in 2010, with an estimated growth rate of 14 percent next year. "After a surge in sales during the economic rebound in 2009 and 2010, the growth rate will be lower than past years," said Wang from IDC.

Wang also pointed out that the rural market will play a significant role for PC makers next year.

HP will expand its distribution channels to 2,000 counties and 10,000 villages, according to Cheung.

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The company said it will continue focusing on rural markets and provide more computer education services to rural residents.

"Our plan is to cover more than 30 provincial regions and provide computer skills training to 120 million customers in rural areas," Cheung said.

"The rural market needs our long-term cultivation," said Wee-kee Yeo, general manager of HP China's Notebooks Business Unit. "Next year we will pay more attention to the quality rather than the quantity."

He said the company launched a plan to sponsor university graduates to work in rural areas as village officials to put their IT skills into practice.

Tao Tao, a 28-year-old official in Dianqian village in Shaoxing, Zhejiang province, recently received an award from HP for setting up a computer lab in the village.