April 18, 2007 5:19 AM PDT

China's PC buyers want notebooks, too

BEIJING--Even in China, desktop PCs are becoming passe.

"We have underestimated the acceleration to mobile every year," said Ian Yang, vice president of sales and marketing for Intel and general manager of Intel China. "The world's going mobile, even here."

Conventional wisdom holds that China is an emerging market nation, and therefore its citizens are more inclined to purchase cheaper desktop PCs. The rest of the world has had enough of traditional desktops, with declining sales in most regions.

But there are many different Chinas when it comes to the PC market, Yang said. The larger cities, like Shanghai and Beijing--host to this week's Intel Developer Forum--are full of people who are buying their second or third PCs and want full-featured notebooks, he said. Sales of desktop PCs are still growing, unlike in the U.S., but only around 6 percent or so a year.

The rural regions are seeing a boom in overall PC buying, with growth rates approaching 40 percent a year, Yang said. PC penetration in the urban areas of China is around 60 percent, but no more than 20 percent of residents in rural areas own a PC at the moment.

That has given rise to a huge demand for Internet cafes, which host around 10 million of all the PCs in China, Yang said. Chinese Internet cafes alone purchase about 3 million to 4 million PCs a year as replacement units, out of a total worldwide demand of more than 200 million PCs a year.

In those rural markets, multinational companies like Dell and Hewlett-Packard can have a tough time competing against established Chinese brands, said Caroline Pan, director of local OEM (original equipment manufacturer) market development for Intel's Channel Platforms Group, which is dedicated to helping local PC distributors grow their business in countries around the world.

"The Chinese tend to be pretty nationalistic. They favor Chinese brands, and the Chinese (companies) have a long history," Pan said.

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