Hewlett-packard Corp announced yesterday it would manufacture and sell digital cameras and digital TV equipment in China this year.
The US-based information technology company aims to sell a complete digital entertainment system in China, part of which will be made here, said Carly Fiorina, HP's chairman and chief executive, during a presentation in Shanghai yesterday.
The system will allow users to create, transfer and share different forms of content through a range of devices including an entertainment hub, digital displays, HP digital cameras and a computer with various multi-media functions.
"HP's promise to invest in China has remained a priority and our level of investment is on the rise," Fiorina said.
She said HP planned to establish 1,000 retail outlets in 100 major cities in China in the future.
Digital cameras under the HP brand will be available in the second half of this year.
Ken Koo, HP China's vice president, said the company will invest millions of dollars in factories in China this year to manufacture new products, but he declined to reveal details. "A large proportion of HP's digital entertainment products will be made in China," he said.
Before the expansion, HP China focused on image print and personal computer business.
Many IT giants, such as Microsoft Corp and Intel Corp, have diversified their business to include digital entertainment device business.
"As profit margins in the PC industry are low and declining this year, companies are focusing on other areas," said Du Wenruan, an analyst at Beijing-based CCID Consulting Co Ltd.
Du said the PC profit margin in China will fell below 10 percent this year.
"Overseas giants are seeking another gold mine. Digital cameras and digital TVs seem a wise choice because of their favorable profit margins," Du said.
Sales of digital cameras in China hit 1.10 million units last year, almost double the level in 2002, according to CCID.
"HP's entry into the digital entertainment industry is not a U-turn for the company, but a next-step strategy," said Fiorina.
The company's revenue reached US$74.7 billion last year.
Microsoft Corp, the world's largest software company, aimed to strengthen multi-media function of its software products to allow users to move their PCs into their living room. Intel Corp, the world's biggest chip maker, has been promoting computer chips designed specifically for video games.