Acer eyes 20-25 percent China sales growth in

SHANGHAI/TAIPEI Mon Nov 21, 2011 9:58pm EST

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SHANGHAI/TAIPEI (Reuters) - Taiwan's Acer Inc, the world's No.4 PC vendor by sales, expects its recent integration with Founder Technology and increased brand acceptance to help grow its China sales by between 20-25 percent next year, said the firm's head of China operations.

Acer, which trails Hewlett-Packard, Lenovo and Dell, announced a strategic alliance with Founder Technology last year to use its PC-related trademark for seven years in a move to beef up its presence on the mainland.

"Next year we plan about 20 to 25 percent (sales) growth," Oliver Ahrens said in an interview with Reuters late on Monday.

"The integration with Founder went successfully and we dramatically increased our stake in the notebook business in China," Ahrens said.

For 2011, Ahrens forecasted a growth rate of 60 percent in China sales as the integration of Founder is expected to sharply boost its fourth-quarter earnings.

Ahrens said sustained marketing and branding campaigns in China over the past two years also helped increase brand recognition.

"We spent over the last two years, this year included, more than $100 million in marketing and retail management, so it's a strong investment we made here," Ahrens said.

Acer ranks No.3 with a 9.3 percent market share in the China PC market, which is predominantly controlled by Lenovo, according to tech research company IDC. The company aims to raise its share to around 12 percent next year.

Acer sees revenue contribution from China to total revenue rising to 17 to 18 percent next year from around 14 to 16 percent estimated for this year, partly helped by its push into rural areas, Ahrens said.

Over the next three to four years, Acer sees the rural market PC and notebook volume growing to 35 to 40 percent of total China volume from a current 15 percent.

"When you go into a market and the market is dominated 60 percent by one player, you have another 40 percent of the people who are very unhappy...because they want to have alternatives," Ahrens said.

As part of the push into rural areas, Acer plans to invest in the creation of dealer and distributor networks and marketing structures that cater to the rural customer, he added.

Ahrens, who will become president for Acer's Europe, Middle East and Africa (EMEA) business in January, said his focus in the EMEA region would be to increase profitability, not market share.

"We have the ambition to be a strong player in EMEA and a leading player in EMEA, no doubt on that. But it makes no sense to be in a market and give away profitability to increase your market share," Ahrens said, adding that 25-28 percent market share for some EMEA countries in return for profitability would be enough for the company.

Acer's Taiwan president, Scott Lin, will replace Ahrens and become head of operations in both Taiwan and China.

Ahrens expected tight supply of hard disk drives due to the Thailand floods will continue to affect the whole PC industry until the first quarter of 2011.

Last month the company said it would raise prices on future orders to cope with rising costs and warned its fourth-quarter sales would be some 5-10 percent below the third quarter due to the impact from Thailand's flooding.

By 0215 GMT on Tuesday, shares of Acer were down 3.8 percent.

(Additional reporting by Argin Chang; Editing by Jonathan Hopfner, Miyoung Kim and Matt Driskill)

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