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Computer Giant Bets on Digital
China's largest PC manufacturer Legend Group mapped out a strategic plan on Saturday to shift its operational focus from PC manufacturing into the digital arena, hoping the move will help build a digital empire in the coming five years.

Senior executives said they expect the company to become a leading high-tech firm by providing quality digital products and services in the domestic market.

In one of its first campaigns aimed at fueling the market, the company launched 11 new digital products, including digital cameras, audio players, printers and e-home products last week.

According to Jia Zhaohui - general manager of the company's digital division -, digital video cameras, mobile storage products and mobile Internet devices are coming up soon.

Against this background, watchers say that the company could be gaining ground in the chilly high-tech winter.

If successful, it could be one of the most encouraging strategic shifts in the domestic IT sector in recent years, as the high-tech sector has been ravaged by a poor performance of Internet-based companies, other high-tech companies and manufacturers and service providers.

"Legend will continue to earmark funds - as much as 420 million yuan (US$50.72 million) - to the research and development (R&D) projects in this new arena in 2002, following the total 300 million yuan (US$36.23 million) investment starting since 2000," said Liu Jun, senior vice-president of the Legend Group.

"And we do not fear competition from traditional heavyweights in the sector, such as Sony and Kodak, as we believe we have more strengths in the market thanks to the large distribution networks we have developed in the past several years," said Liu, who is also heading the company's consumer IT sectors.

By the end of the year, Legend expects its earnings from digital products to account for as much as 10 percent, or 1 billion yuan (US$120 million) of its total earnings from the consumer IT sector.

"We believe digital products will see explosive growth in the coming years, and we expect that the earnings from Legend's digital products could be six billion yuan (US$724.6 million) by 2005," said Liu at the press conference held on Saturday.

Apart from its digital sales, the company said it also wants to see a continuous boost in home PC shares in the market, which is currently the core business of the company's consumer IT division.

"Our target in 2002 would be a 40 percent market share in the home PC market," Liu told reporters, which represents a considerable increase compared with its current 30 percent market share.

Similar to China's color TV market, the country's PC sector has suffered from continuous and fierce competition since the late 1990s, when the sector was hit by the bursting of the Internet bubble, causing many companies to become loss-ridden and some even resorting to price wars for survival.

Liu said one of the company's key strategies this year is a reshaping of its distribution channels by strengthening its franchise sales nationwide, with a focus on small cities.

Meanwhile, he ruled out speculation that the company would follow the path of international heavyweight PC supplier Dell, whose direct selling has made the company one of the best sellers in the market.

(China Daily May 20, 2002)

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