DELL Inc. plans to buy components worth US$23 billion from China this year and US$29 billion in 2009, helping it reduce costs while the company’s main market, the United States, is facing recession.

The commoditization of computer hardware means competition is more a function of price and efficiency than quality and branding, making China a favorite place to source a broad range of goods, including electronic components.

“China is critical to Dell’s global supply chain,” founder and chief executive Michael Dell said during the weekend.

“Dell will purchase US$70 billion of computer-related supplies and equipment from China,” he said, referring to total purchases over the 2007-2009 period.

The world’s second-largest personal computer maker, Dell is far from alone in looking to China to reduce manufacturing costs and remain competitive.

Last November, Cisco Systems Inc. said it would almost double its purchasing from Chinese suppliers over five years to US$16 billion.

Cisco is the biggest maker of routers, switches and other equipment that make up the Internet.

Hardware makers such as Dell, Cisco and Hewlett-Packard (HP) could be hit hard by a U.S. economic downturn, Dell even more so because it relies on the United States for about half its revenue, a much higher proportion than larger rival HP.

That makes China’s role as a customer equally important to Dell, which saw a 54 percent rise in unit sales on the mainland during its last financial quarter.

“China is one of the most dynamic and fastest-growing economies in the world, and we’ve made significant business and social investments here in the past 10 years,” said Dell.

Dell’s presence in China includes two manufacturing operations in the south, a product design center in Shanghai — one of the company’s largest — and a sales support center in the northeast for customers in Japan and South Korea.

(SD-Agencies)