HP eyes enormous growth opportunities in China
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In October 2008 when the unfolding global financial crisis was at its peak, Hewlett-Packard Co. (HP) made a bold move by announcing plans to build a manufacturing plant in Chongqing, a municipality in western China. [Full coverage: HP faulty laptops]
The facility, opening for business in January 2010 and capable of rolling out up to 4 million personal computers (PCs) a year, reflects the strategic importance of the Chinese market for HP as well as the world's largest PC maker's long-haul commitment to China, a senior HP executive told Xinhua in a recent interview.
Todd Bradley, HP executive vice president of Personal Systems Group, said HP, already a leading foreign PC vendor in China, still saw huge opportunities to grow in the world's most populous country with a population of 1.3 billion.
HP's investments in both human and material resources in the past have laid a phenomenal foundation for HP's growth in China, he said. "There are still lots of territory to cover and still more opportunities to drive that growth."
As the first Sino-U.S. high-tech joint venture that officially entered the Chinese market as early as 1985, HP has expanded its business and services into nearly 700 cities and 2,000 counties in China, making many contributions to China's progress and also benefiting from China's rapid economic growth.
Bradley said China was already HP's second-largest PC market after the United States, representing a significant portion of the company's growth and profitability.
The Chinese market has been a bright spot for HP during the economic slump, he said. For instance, worldwide revenue of its Personal Systems Group in HP's 2009 fiscal fourth quarter fell 12 percent year-on-year but the Chinese market delivered the strongest performance with over 40 percent revenue growth, said the HP chief financial officer.
"It is very fair to say that the growth of China on a big business, making a big business bigger for us has been extraordinarily important," Bradley said.
"It was one of the things that helped us very significantly in the economic downturn that the (Chinese) government chose to support and encourage domestic consumption of domestically manufactured products like our PCs," he added.
Looking ahead, Bradley said he believed the high growth of China's economy with incentives provided by the Chinese government, access to well-educated employees and the still under-tapped huge market will make China still attractive to HP.
Compared with the most mature markets where PC penetration is as high as 900 units per thousand people, the rate in China now is about 150 PCs per thousand people and the opportunity is huge, he said.
HP has the capabilities and desire to participate in the opportunities in China. "It's a long-term partnership and relationship that will reap benefits for a very long time," he said, adding that the company would continue to expand and invest in China in a whole number of ways.
Bradley pointed out that the ability to understand and meet various local requirements, in the forms such as creating local products, is critical for HP's continuous success in China and elsewhere.
"In addition to China, we're in 174 countries in the world. And, without exception each one of those has local requirements, local nuances that we believe are important to those people," he said.
"We're very respectful of what those -- both social, economic and legal -- requirements are. And we think our job is to live up to those requirements and exceed those requirements."
He also admitted that HP's business in China was facing challenges like in other countries across the world, including very tough local competitors and very knowledgeable, demanding customers.
In recent months, hundreds of consumers in China have filed complaints against HP over faulty laptops, and investigation by China's quality control watchdog found the company did not adhere to consumer protection regulations.
HP responded by launching a series of customer care programs and initiatives.
"We have redoubled our efforts to serve the Chinese customers, including making plans for having 1,000 service centers within 12 months, up from about 500 today," Bradley said.
"And we will listen carefully to our customers to earn their business and their loyalty. This is how we will prove that we know we can do better -- and will do better to improve," he noted.
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