Business Digital China Starts to Expand Distribution


by ERIC CASTRO - Date: 2007-04-23 - Word Count: 570 Share This!

The mainland's largest IT product distributor, Digital China, plans to further expand its distribution network in China small- and medium sized cities, where there is increasing demand.

'In the remainder of 2006-07, we will establish 30 to 50 distribution points in the China small cities,' said Lin Yang, Digital China executive vice-president.

Digital China has three major distribution centers in Beijing, Shanghai and Guangzhou and 10 distribution points in 10 provinces and capital cities. To further strengthen its coverage in third- and fourth tier cities, Digital China added 29 cities into its distribution network in 2005-06. Its total number of resellers reached 8,225 on the mainland, representing a year on year growth of 35 per cent.

'Our distribution business has had good market penetration in China first- and second-tier cities, but with the third- and fourth tier cities there is still a big potential for us to further explore,' Lin said.

As the world's third-largest IT service provider, just behind IBM and Hewlett-Packard, Digital China saw its total turnover surge to HK$19.8 billion (US$2.54 billion) in the fiscal year ended 31 March 2006, an increase of 28.5 per cent year-on-year. Its net profit jumped by 35.3 per cent up to HK$252 million (US$32 million), the company said yesterday.

Its core business, the distribution of IT equipment, generated a turnover of HK$11.6 billion (US$1.49 billion), 33.3 per cent up from the previous year. The turnover from the sector grew most remarkably in the fourth quarter of the year to HK$3.04 billion, an increase of 51.7 per cent from the corresponding period of the previous year.

'Turnover from desktops and laptops contributed most to the total turnover of the company's distribution business,' said Lin, who told reporters yesterday that in the fourth quarter of the year alone turnover from the two grew by 316.9 per cent and 64.4 per cent respectively.

'They (desktops and laptops) also account for 15 per cent and 25 per cent respectively of the company's total turnover in the 2005-06 fiscal year,' Lin said.

Lin said that revenue from selling desktops and laptops would still be a major source of the company's total revenue.

'With a 28.5 per cent growth in turnover, we are well above the average annual growth rate of China IT market, which is about 11.4 per cent,' said Digital China President and CEO Guo Wei.

Guo said that the appreciation of the yuan also helped pump in more profit for the company. 'It allowed us to reduce costs such as those from importing products from overseas,' he said. 'In the end it helped us generate some HK$31 million (US$4 million) in net profit.'

Digital China expects to find more new customers, especially in China electricity industry.

'This (electricity industry) is the sector that our company will be keen to develop,' Guo said.

Digital China is now providing software integration and hardware integration services to more than 100 major companies and organizations mainly from the banking, telecommunications, taxation and government sectors.

Lin dismissed the rumor that his company was in talks with Ingram Micro, the world's largest technology distributor, about the latter buying 60 per cent of Digital China distribution business for US$260 million.

This article was researched and produced by Posicionarte for China Trading Company , 2007 Author Bio:

Eric Castro Mattas, is chief editor of Posicionarte researching and producing articles for China Trading Company. If you need products from China please visit www.chinatrading-company.com


Related Tags: china, china trading, china trading company, trading with china, electronic products china, china computers, yiwu purchasing agent, wholesale markets

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