Dell Turns to China With $52 Billion to Cut Down on Costs
Today Dell Computers (DELL) announed that it plans to buy $23 billion of components from China this year and $29 billion from China in 2009. With the US economy facing a recession reducing costs is a critical moving foward.
This news is not a surprise though as other companies have already been approaching the matter in the same way. Cisco Systems (CSCO) announced it would be doubling its purchases from China over the next five years.
As for competition goes, Hewlett-Packard (HPQ) is not in as tough of a position as Dell is. Dell relies on the US for nearly half its total income where as HP is far less dependent.
Between the two competitors, HP took the number one market share spot from Dell with its focus on laptops and selling through retailers. Because of this, Dell last year stepped away from its direct-only sales model and now sells PCs in retailers such as Wal-Mart (WMT).
I can’t help but to relate “made in china” with a cheaply made product, not just a cheap price. I don’t think I am the only ignorant american around and feel like Dell is going to save money now but lose in the long run. I will stick with an overpriced apple.