Beijing Places $3-Million Computer Order With Western Digital--Only a Beginning?
Western Digital of Irvine has received its first order ever from China to supply up to $3 million in computer products to China’s largest personal computer maker.
Although the order is relatively small for a company that expects total sales to exceed $700 million, Western Digital is hoping that the agreement will open doors to China’s emerging electronics market. The Beijing government has said development of the nation’s computer and electronics industries is a key part of its modernization drive.
“We are very excited about this accord because it it our first major order from a computer manufacturer” within China, Western Digital Chairman Roger W. Johnson said.
The China Computer Development Corp. (CCDC) has agreed to buy computer add-on boards and computer memory chips for use in its “Great Wall” line of personal computers, Western Digital said. China Computer has also received a license from Western Digital to build boards using the Irvine firm’s chips and to market those boards to other Chinese computer companies.
A computer board is a flat piece of fiberglass or other material on which computer chips are mounted. The boards control the memory, graphics and other functions inside a personal computer.
Leading PC Manufacturer
CCDC is reportedly China’s leading personal computer manufacturer, with 40% of the nation’s market. Last fall, the firm began marketing a line of IBM-compatible personal computers in the United States.
The Chinese manufacturer has sold about 450 “demonstration models” in the United States, said Larry Schwartz, marketing vice president of Wescom Inc., a company based in Los Angeles County’s Santa Fe Springs that acts as U.S. sales agent for CCDC.
China Computer eventually hopes to market Great Wall computers through retail stores, Schwartz said.
Western Digital hopes that the CCDC deal will lead to more business in the years ahead, said William R. Sala, vice president of international development.
“We think it could lead to significant future sales as we expand the product offerings to them,” he said. “I believe we’ll enter into this relationship slowly to get to know each other and build up trust.”
Wang Zhi, CCDC’s president, said the agreement “is just the beginning of a very productive partnership with Western Digital.”
In an effort to speed development of its computer industry, China has stepped up efforts to acquire Western technology.
The products that Western Digital wants to sell to the Chinese firm do not represent the most sophisticated technology available, Sala said: “This is the most popular technology used in IBM PC-AT controller boards being used by (PC) clone and compatible makers. We have other board products with technical features that surpass these.” Nevertheless, the Western Digital sale must be approved by the federal government, which restricts sales of certain technology to Communist countries. Western Digital is confident that the sale will be approved, Sala said.
Recognition of Market
China “is interested in getting U.S. firms to set up operations over there or getting U.S. firms to set up operations for Chinese companies,” said John Hatch, a spokesman for the American Electronics Assn., a Silicon Valley-based trade group.
“(Chinese leaders) recognize they are at a low technology level, and they want to build it up,” he said. “U.S. companies recognize that there might be a good market over there.”
Last month, the AEA opened its first liaison office in China to help U.S. and Chinese companies establish closer business ties.
