Abstract

The case discusses the problems that US based Dell Computers, a leading global manufacturer of personal computers (PCs) and other hardware systems, faced in China. Dell entered China in 1995 and was successful in capturing a considerable share of the Chinese PC market. Dell adopted its 'direct model' for selling its products in China, as it had proved to be successful in several other countries in the world. The company did well in the urban markets in China which, however, witnessed slow growth in 2004 and 2005. High growth in PC business was mainly witnessed in third and fourth tier cities where Dell was unable to successfully implement the direct model owing to low penetration of Internet and low usage of credit cards. By late 2005, Dell's market share dwindled, owning to its inability to capture the semi-urban and rural markets in China.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Evaluate the importance of localizing global business models to suit specific countries
• Examine the importance of growing PC markets in semi-urban and rural areas in China and develop suitable strategies to tap them.

Keywords

Dell Computers, Direct Model, Rural Marketing, Direct Marketing, Value Web Model, Dell in China, Gunaxi, Distribution Network