Dell plans to withdraw from the Chinese market
In 2022, the American technology company Dell announced that it would completely withdraw from the Chinese market in stages by 2025. It is rumored that Dell has formulated a detailed timetable, planning to completely exclude Chinese manufacturing from the downstream ** chain in China by 2025, gradually reduce the procurement ratio of Chinese ** merchants in 2026, and achieve complete separation of products sold in the US market from Chinese manufacturing in 2027.
This means that Dell will cut off the complete industrial chain system formed by operating in China for more than 30 years in a very short time. Dell China is an important part of its global chain, and the break of this chain will have a significant impact on its global operations.
In addition, Dell has already taken action to gradually stop selling a number of products sold in China. Its Radeon RX 7900 XT, Radeon Pro W7900 and other graphics cards have stopped selling in the Chinese market. Dell has also suspended its plans to purchase parts in China. These moves signal an acceleration of its exit from China.
If Dell really withdraws from the Chinese market by 2025, its manufacturing and chain in China will face a complete breakdown. This will seriously affect Dell's global production capacity layout and product supply, which may lead to a further decline in its market share and profitability.
Dell's dilemma
Dell's plan to withdraw from China, if implemented, will bring a very serious dilemma to itself.
Dell relies heavily on the Chinese market. China provides about 85% of its upstream ** chain support, making it the second largest market in the world. If it is fully "decoupled" from the Chinese ** chain in a short period of time, it will greatly increase Dell's global operating costs, and this transfer is extremely difficult.
Dell's market share in China has declined. After announcing its exit from China, its share of the Chinese PC market has slipped from second to fourth place, being overtaken by brands such as Huawei and Apple. This directly led to a significant reduction in sales and profits in the Chinese market.
Dell's overall performance is also declining. In the third quarter of fiscal 2022, its global revenue fell 11% year-over-year, marking two consecutive quarters of negative growth. At the same time, Dell's current total liabilities have exceeded $110 billion. To sum up, if it insists on withdrawing from the Chinese market, Dell will face severe difficulties such as broken chains, loss of market share, and aggravated losses. This could accelerate the decline in its competitiveness on a global scale.
Revelations from the event
Rumors of Dell's plan to withdraw from the Chinese market, as well as the difficulties of its business in China, have brought profound enlightenment to related companies
Other companies have stated that they will not easily exit the Chinese market. Executives of Nvidia, Qualcomm and other companies have made it clear that the Chinese market is extremely important to them and is irreplaceable. They will continue to grow their business in China. In fact, AMD and Nvidia have both recently seen sales growth in the Chinese market. This reflects the fact that the Chinese market remains very attractive.
Dell was forced to publicly deny plans to withdraw from China. But because of the unusual moves of its business in China, consumers have questioned it. The CEO of Dell himself had to come forward to emphasize that Dell will stick to the Chinese market for a long time. This reflects the fact that rumors of a company's exit from the Greater China market will cause great damage to the company's image and goodwill.
Dell's lesson shows that no business can easily exit the Chinese market, and it will come at a huge cost. The Chinese market is huge, and it will be difficult to re-enter once it exits. Foreign-funded enterprises should adhere to local development and grow together with China's economy. Only by deeply cultivating the Chinese market can we obtain long-term development momentum.
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