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Struggling Dell enters Gome partnership
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Dell Inc said yesterday it will begin selling personal computer products through Gome Group, China's largest electronic retailer, in a move to win back consumers by going beyond its direct-sales model.


Under the agreement, Dell products will go on sale next month at 50 Gome outlets and will expand to more stores nationwide in the first half of next year.


The deal has broken Dell's long-held model of provisioning products through the Internet and over the phone in China, where the world's second-biggest PC maker has lagged behind competitors Lenovo and HP.


"The cooperation between Dell and Gome is an extension of Dell's direct-sales model in China. We found consumers are more willing to touch and feel products before they purchase them," said Michael Tatelman, vice-president of marketing and sales for Dell's global consumer business.


Gome Group, the parent company of Hong-Kong listed Gome Electrical Appliances Holding Ltd, has a retail network of 950 stores in 210 cities in China, said Wang Junzhou, a Gome executive vice-president.


The company experienced a 100 percent revenue increase in its PC retailing business in the first half of the year and currently has cooperation agreements with all the major PC vendors in China, including Lenovo and HP, Wang said.


"With its cooperation with Gome, Dell will be able to penetrate more effectively into China's consumer market," said Simon Ye, an analyst with research firm Gartner.


"As Gome is building up its network in China's third- and fourth-tier cities, Dell will also have access to these areas."


Despite gaining significant market share in the United States, Dell ranked fourth in China, according to Gartner. Its market share in the second quarter of 2007 reached 6.8 percent, while that of Lenovo, HP and Founder reached 29.3 percent, 10.9 percent and 9.2 percent respectively.


According to experts, the company's sluggish performance in the country is due to its failure to profit from emerging markets in China's second- and third-tier cities where Internet use is lower, hindering Dell's direct-sales model.


In May, Dell began selling computers in the US through the world's largest retailer Wal-Mart. Since then, it has signed similar deals with retailers in the UK, Japan and Russia.


(China Daily September 25, 2007)


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