Legend Holdings Ltd has clinched agreements with six leading international LCD (liquid crystal display) monitor makers to be its suppliers.
The firm is the largest PC maker in China and has a 40 percent market share in the fastest growing sector.
The move sets a record high, of 1.8 billion yuan (US$216 million), for a single deal in China's PC industry.
The deal includes the purchase of 600,000 LCD monitors from the six partners. Officials from Legend said this was largely driven by strong market demand and an optimistic forecast whereby LCD monitors will achieve significant penetration among consumers and businesses in China in the second half of the year.
The advantage of the purchase is that the firm will get strong technical and product support from its new partners.
Compared with the currently dominant CRT (cathode ray tube) monitors, the key benefits of LCD technology are lower power consumption, sleeker design and space saving.
As part of the deal, LG-Philips LCD Co, Hannstar Display Corp, Proview International Holdings Ltd, Philips, TVP Holdings Ltd, and Chungha Picture Tubes Holdings Ltd. will provide top-notch quality products for Legend at competitive prices .
The agreement also allows Legend to collaborate with its partners to jointly develop LCD technology and new products tailored for the digital era.
Liu Jun, senior vice-president of Legend, said the move was a key part of the company's long-term home project, which features the provision of new digital products for home-use in the future.
"The purchase is based on our forecast that the market demand for LCD PCs will see an explosive growth, far more than the previous estimation of 190,000 by some international research institutions," he said.
Legend launched a highly competitive type of PC equipped with LCD monitors priced below 10,000 yuan (US$1,200) on May 21, triggering a buying frenzy among customers who decided to upgrade their PC systems with the purchase of a new LCD monitor.
However, there is a shortage of LCD monitors.
In many of its chain stores, LCD PCs are out of shelves and a large number of customers are putting a deposit down and then waiting for new products to arrive.
In June, Legend sold 50,000 LCD PCs. Sales of such PCs now make up 50 per cent of sales compared with 1 per cent at the beginning of the year.
The figure is expected to reach more than 60 per cent by the end of this year, Liu said.
"Our tie-up with the suppliers will further sharpen our brand's competitive edge with even better products and very competitive prices," he said.
The deal and a partnership with Legend has a lot of significance for the six suppliers. Amid the US economic slowdown and a global cut on IT spending, the strong performance of China's market will help offset their business decline in other regions, analysts said.
(China Daily 07/09/2001)