EMC Corp, the world's leading manufacturer of systems for information management and storage, said it will purchase smaller rivals on the Chinese mainland in a bid to fuel its development and smooth its transformation to an IT infrastructure consultant.

 

EMC is currently in talks with two to three information management and storage companies on the mainland and hopes to reach agreements soon, said Denis Yip, EMC's president for Greater China.

 

He declined to give further details on the acquisitions. But the move is part of a "five-year" US$500 million investment on the mainland the company says is geared toward securing its foothold as the No 1 information management and storage provider.

 

Yip, a former IBM executive, said the target companies must have good development potential and supplement EMC's mainland operation.

 

"The business margin in hardware manufacturing nowadays is getting smaller, as is the business development room for the already big manufacturers," said Zhang Xubing, assistant professor from the Department of Management and Marketing, the Hong Kong Polytechnic University. "To transform their roles from hardware makers to IT infrastructure service providers is of vital importance."

 

Zhang said IT companies such as IBM and EMC no longer have the advantage of making high-end hardware products.

 

"Their smaller counterparts can produce the same quality, which pushes heavyweight IT groups to extend or even switch their business models," Zhang said.

 

EMC's Yip said the biggest challenge for the firm is branding. Most customers see them as solely an information storage manufacturer, not a consultant or professional service provider.

 

"The role of transformation is my biggest concern, despite the fact that our company is already very famous," Yip said.

 

The company announced early this month it signed a memorandum of understanding with the Beijing city government's information office to collaborate on the city government's "Digital Beijing" initiatives.

 

EMC said in a statement it will assist in developing a data recovery information infrastructure and set up business continuity as well as a backup centre and information security lab to ensure business continuity and information availability.

 

(China Daily December 5, 2006)