Chinese Firm Invests US$1.8b to Challenge HP, IBM on Internet Servers

A Chinese information technology (IT) firm plans to invest two billion yuan (US$240m) to increase production of Internet servers and overtake Hewlett-Packard (HP) and IBM in the domestic market.

Liu Jingjin, a spokesman for the Langchao Group, said on Tuesday that the company would invest this money over the next three years, part of a four billion yuan loan it had signed with Industrial and Commercial Bank of China.

''Last year HP ranked first, IBM second and we third in the domestic market. Our share was 14.2 per cent,'' she said.

''Our aim is to become first by 2003. We will concentrate our research, development and production on servers, because the prices of PCs (personal computers) are getting lower and lower. ''This two billion yuan represents the largest single investment in servers by a Chinese IT firm,'' she said.

According to the Beijing Youth Daily, the server market in China last year was worth US$700 million, making it the fastest growing market in Asia and attracting competition from foreign and local manufacturers, including Legend Holdings, Founder Group and Jincheng.

The decision to invest heavily in servers is a result of the promotion of SunPeisu to president of Langchao in May this year.

Mr Sun, who had served as a vice-president for four years, decided to divest the company of non-core products and concentrate on software and telecommunications products.

Langchao was established as a state company in 1969 in Jinan, the capital of Shandong province. It moved its headquarters to Beijing earlier this year.

''We were originally a state firm but now have become a shareholding firm,'' Ms Liu said.

''We listed one of our companies, Langchao Information, in Shenzhen last year and this year are listing a second one, Qilu Software, through acquiring a shell company, Taishan Tourism.

Mr Sun said that, in 1993, the firm manufactured China's first small-size server, breaking the foreign monopoly on this product.








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