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Dell to open Chinese plant

China's government has given Dell the go-ahead to expand its Asian operations via the opening of its manufacturing and customer service center.

China's government has given Dell Computer (DELL) the go-ahead to expand its Asian operations.

Dell's planned 135,000 square-foot facility in the southeastern city of Xiamen will serve as a sales and technical support center and a production facility, modeled along the lines of its customer center in Panang, Malaysia. While Dell currently has sales offices in Beijing, Shanghai, and Guangzhou, the new Xiamen facility will give the company a manufacturing presence in Asia's second-largest market.

The China Customer Center will produce the entire range of Dell products, and employ some 200 people. Notebook, desktop, and server computers will be sold into China's rapidly growing market.

Reversing its normal course of operations, in China Dell sells most of its products through resellers. The Round Rock, Texas, company also sells build-to-order models, albeit at a more limited capacity.

Dell's announcement, close on the heels of a Dell plant to be built in Ireland, comes at point when analysts and industry watchers have been raising warning flags about doing business in Asia. Notwithstanding Asia's economic turmoil and its relatively low market share, the company remains optimistic.

"Despite market share of 2 percent, there are long-term growth opportunities. We remain very bullish on the Asian market, especially on the long term," said T.R. Reid, a Dell spokesman. "China is no exception. These windows of opportunity will not to be open forever."

Reid pointed out that Dell's fourth quarter 1997 revenues from Asia-Pacific and Japan showed 79 percent growth over fourth quarter 1996.

U.S. computer manufacturers once dominated the Chinese market, but last year local manufacturers, most notably Legend Group, began surpassing foreign brands due to government preferences and their attention to local preferences.