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Sotec hopes for market breakthrough
By Liu Baijia (China Daily)
Updated: 2004-05-19 08:43

Japan's third-largest notebook computer firm Sotec aims to gain a foothold in the Chinese market by setting up its first production plant in the nation.

Sotec Co chairman Soichi Obe described the move, which will also strengthen the firm's global competitiveness, as a "dream come true."

Obe said it had been his goal to set up a production base in China ever since his firm started to design and sell computers using its own brand more than 10 years ago.

The NASDAQ Japan-listed company formed a joint venture - Beijing Sotec Co Ltd - in January with its Chinese partner China National Electronic Devices Corp, with Sotec owning a 60 per cent stake.

The new plant, which will assemble notebook computers, is based in Suzhou, in East China's Jiangsu Province.

This is a step into new territory for Sotec, which previously focused on computer design and sales.

Low production costs and proximity to the local market were the major reasons for the shift in the company's strategy, Obe explained.

Fast growth and high profits reaped from notebook sales have attracted more foreign players to play a role in this sector in China, said Huang Yong, a senior industrial expert at domestic research house CCID Consulting.

Exports of notebook computers increased by 44 per cent year-on-year in the first quarter to 378,000 units, with sales also growing by 28 per cent to 4.86 billion yuan (US$587 million).

The Suzhou factory is expected to achieve an annual production of 300,000 to 500,000 notebook computers.

Sotec's first four products released in China mainly use more expensive central processing units such as Pentium M and Celeron processors of US giant Intel, rather than the more popular Centrino processors.

Obe also believes his company will gain an advantage from the computers' fashionable designs and high performance-price ratio.

Shedding the traditional colours of black and grey which are normally used in notebooks, Sotec has opted for white, which it hopes will help it win more younger customers.

The company aims to sell 20,000 units this year and 30,000 to 50,000 units in 2005.

Consumer purchases and orders from the government and education sectors were major driving forces behind the growth of notebook sales in the first quarter, so Sotec may have chosen to focus on the most appropriate segment in order to achieve its breakthrough into the Chinese market.

But he cautioned that a poor knowledge of Chinese market could be a crucial disadvantage for the company.

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