Dell to Invest $125 Billion in China Market

By Jeffrey Burt  |  Posted 2015-09-11 Print this article Print
Michael Dell

The company also is planning to expand its R&D team in the country and support entrepreneurs as part of its "In China, for China" initiative.

Dell is planning to invest $125 billion in the China market over the next five years, the latest announcement by a top-tier U.S. tech vendor expanding their efforts in the lucrative market.

CEO Michael Dell, in a visit to the country Sept. 10, said his company's investment will contribute as much as $175 billion to exports and imports in China and support more than a million jobs. In addition to the financial investment, Dell's "In China, for China" 4.0 strategy will include its venture capital arm—Dell Ventures—helping to fuel entrepreneurship in the country and drive innovation in Chinese enterprises, working with the Chinese Academy of Science to create a joint lab to work on technologies around artificial intelligence and advanced computing, and growing its R&D team in China to create solutions aimed at the Chinese market.

Dell already has about 2,000 senior engineers in China, the company said.

China and the United States are the countries where IT is developing the fastest and creating "the most vibrant enterprises," Michael Dell said in a statement.

"The Internet is the new engine for China's future economic growth and has unlimited potential," he said. "Being an innovative and efficient technology company, Dell will embrace the principle of 'In China, for China' and closely integrate Dell China strategies with national policies in order to support Chinese technological innovation, economic development and industrial transformation."

During an interview with international journalists at the Dell World 2014 show last year, the CEO said that the growth opportunities for Dell and other tech vendors are in the emerging markets rather than established regions like the United States and Western Europe.

"When you're talking about the next billion users, they're not going to come from developed markets," Michael Dell said. "They're going to come from developing markets."

The China market—with its huge population, rapidly growing middle class and hunger for technology—is getting a lot of attention from U.S.-based tech vendors. Cisco Systems in June announced it was investing $10 billion in projects in the country over the next few years, and Hewlett-Packard a month earlier announced it is working with Tsinghua University in China to create a joint venture called H3C that will sell such products as servers, networking gear and services into the Chinese market. As part of the deal, HP sold a 51 percent stake in the new company to Tsinghua Holdings for about $2.3 billion.

Intel in 2014 said it is investing $1.5 billion in Tsinghua Unigroup, giving the chip maker a 20 percent stake in the state-owned venture that runs Chinese chip designers RDA Microelectronics and Spreadtrum Communications. Intel also is partnering with Rockchip to create Intel-based systems-on-a-chip (SoCs) for tablets, and last year the company created a $100 million fund aimed at the Chinese market.

While such vendors are expanding their reach in the China market, government officials in the country are pushing to have more of the technology used in China come from Chinese companies.

Dell has had a presence in the country for about two decades and years ago announced plans to invest $250 billion in the country over 10 years. According to Jeff Clarke, vice chairman of operations and president of client solutions for Dell, 65 percent of the company's finished systems are produced in China by Dell and its partners. Dell has a presence in almost 11,700 stores, and more than 100 stores for its Alienware gaming systems.

Dell reportedly had about $5 billion in yearly sales in China before Michael Dell and Silver Lake Partners in 2013 took the company private in a $24.6 billion buyout.



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