Dell says strong sales growth to drive China share

KUALA LUMPUR (Reuters) - Dell Inc will open more retail stores and expand its sales force in China's smaller cities as it plays catch-up with Lenovo and HP in one of the world's fastest growing PC markets, said a company executive.

On top of its more than 3,000 sales points, Dell recently launched a flagship retail store in Shanghai, China's financial hub. The PC maker has also been beefing up its sales force in China's secondary cities.

"We will continue to make those investments. We will open more retail stores and of course we are expanding our sales team in the (secondary cities)," said Amit Midha, head of Dell's small and medium business unit in Asia.

"We want to make sure the tier three, tier four cities have Dell's sales people on the ground," he said in an interview.

Dell wants to grow its market share in China, where it lags behind Lenovo and HP.

Midha said Dell's unit share in China stood at about 9 percent. Lenovo's share is at 29 percent and HP at 14 percent, according to industry data.

Midha said Dell's higher-than-average sales growth will drive up its market share in China, which has already displaced the United States as the world's largest desktop market.

"Whenever the market grows, we will grow faster than that, that means we will gain share," said Midha. He declined to provide the PC maker's internal market share target.

Some analysts have said Dell is likely to underperform in a recovery in the PC market due to its high corporate exposure, as well as a smaller share in fast-growing emerging markets such as China.

U.S.-based Bernstein Research forecast PC unit growth will shrink 2.5 percent in 2009, but grow 11 percent in 2010 on renewed corporate demand.

Midha said although demand in China and India has picked up strongly, it is a different story for other countries.

"(Demand outlook in) Japan is not clear yet, South Asia has just started to show a better performance, so depending on which markets that you are talking about the answer could be different," he said.

But the outlook for Asia's PC market should only get better, barring any unforeseen crises, he said.

"Outlook is improving everywhere right now. We do see the South Asian countries are starting to show better traction either through government initiatives or customers having more confidence," said Midha.

(Editing by Rupert Winchester)