PC makers are jostling for market share in China's computer market, which is experiencing an explosive growth rate of almost 50 percent a year.
Taiwanese PC makers are among the competitors, but they're taking a different strategy than other makers, according to an article in the JapanBizTech online news service based on a report in Taiwan's Commercial Times.
Numbers from IDC Research pegged PC sales in China at 2.9 million units in 1996, a 45 percent gain over the year before. The growth rate was the highest in Asia.
So far, the primary weapon computer makers have used in the fight for market share has been discount prices.
Compaq, currently the leading supplier of PCs in China, extended an estimated $80 million to $100 million in financing to distributors last year as part of financial incentives for computer buyers, according to the report.
Toshiba, the top notebook brand in China, has given its distributors there both price cuts as well as preferential payment options, the Commercial Times report said.
Taiwanese notebook maker Twinhead, which had previously competed closely with Toshiba in China, started to fall significantly behind in early 1997 after Toshiba started its new strategy of cut-rate sales.
A Twinhead executive cited the company's smaller size as one reason it can't afford to compete in a price war with international computer giants such as Toshiba, the report stated. The executive also noted that those companies tend to have more extensive product lines and greater brand-name recognition. And other Taiwanese firms face the same obstacles as Twinhead.
Twinhead continues to follow a "no payment, no delivery" policy with its distributors to reduce financial risk, unlike companies such as Toshiba that are extending financing to their dealers, according to the report.