China PC sales hit $15bn in 2005

Analysts have reported strong demand for notebooks and desktops from SMEs and consumers

China's domestic demand for desktop and notebook PCs is growing at a brisk pace with sales reaching $15bn last year, but profit margins are falling, analysts say.

This trend is predicted to continue, as sales rise 50 per cent over the next two years from 20 million PCs last year to 30 million in 2008, said CCID Consulting, a government-funded research organisation.

"The unexpectedly strong demand from small and medium enterprises and consumers drove computer consumption above our expectations," Huang Yong, president of CCID Consulting, told the China Daily.

A Dell China executive who spoke to the paper last week also singled out the small and medium business market as a significant driver for present and future demand.

But while desktop computer sales grew 16 per cent last year, sales revenue only rose about five per cent, indicating a significant drop in profit margins, CCID said.

Shipments of notebook PCs, which generate higher profit margins than desktop PCs, increased more than 40 per cent year-on-year in the last quarter of 2005. Total shipment value reached about $850m for the quarter, Beijing-based research firm Analysys International reported.

Leading local brand Lenovo held just over a third of the market, with Dell and HP trailing at 14 per cent and 11 per cent respectively.

With the exception of Lenovo, local manufacturers had difficulty making inroads against strong foreign competition in the notebook market, Analysys said. Foreign-owned firms controlled around half the market.

Desktop and notebook shipments will expand 14.5 per cent a year during the next four years, CCID predicts, with sales revenue trailing at 11 per cent growth a year. Total sale revenue is predicted to hit $27bn in 2010.

As well as its growing domestic market, which tends to favour low-priced, low-end products, China is a huge source of computers and other electronics for export worldwide.