Hewlett-Packard Co.'s key to continued success for IT services in China depends on timely entry into the manufacturing sector, said CH Kee, general manager for HP Services, Hewlett-Packard China/Hong Kong Region.
"There has been a lot of talk about China becoming the factory of the world," Kee said. "And because of my experience with manufacturing, I believe that China's manufacturing sector will boom, and I am planning to be right there when it happens."
Timing is key in China, said Kee, adding that the time has never been riper. "There has been a lot of interest, both foreign and local, to build up this sector and I think the time is right for us to invest in manufacturing."
Kee is pulling out all stops in its bid to enter the China's manufacturing sector. "Right now I am looking to partner with my Taiwanese counterpart to help Taiwanese companies set up manufacturing facilities in China," he added.
For Hong Kong, HP will introduce a new program called "China Link" that will help companies here to take advantage of the manufacturing opportunities in China, "in the next few months". "We have had experience in manufacturing ourselves and we have customers who have built themselves up in this sector as well," he added, "and we are looking to share this experience."
Such a move will no doubt strengthen HP's strong portfolio in the manufacturing sector, said Rolf Jester, chief analyst for the IT services market in Asia/Pacific, at Gartner Inc. "It is true that HP has a strong presence in the manufacturing sector generally, from well before the acquisition of Compaq."
"HP's recent acquisition of Compaq has strengthened the company in terms of size and geographic market coverage overall and in China too," added Jester, who declined to provide market share rankings by country "as it will be published soon."
Compaq, as a result of its previous acquisitions, had been traditionally strong in developing large customer accounts," Kee said. "HP has a lot of middle-sized accounts." The combination of both teams, he said, will "no doubt increase our offerings and penetration into the market."
This penetration may be blunted by IBM Corp's recent intent to purchase of PwC Consulting, said Jester. "In China, the acquisition would add a respected and capable group of consultants to the company that is already (a) market leader in services and extend their lead," he added.
In effect, it will extend "IBM GS's capability in consulting and ERP implementation, including in the manufacturing sector," said Jester. "Nevertheless, HP's reputation, size and technology also gives it a solid competitive basis in this sector in China," he added.
Jester, however, believes that HP must seek new options for growing its services business in the Asia-Pacific region as well as globally. "If further acquisitions are not on the agenda while they integrate Compaq, then more needs to be done towards building a serious set of focused alliances to compete with IBM," said Jester.
Kee remains confident about HP's dominance in China when it comes to IT services.
"In terms of IT consulting, (the) total market for HP in Hong Kong only accounts for three percent," said Kee. "In China it is eight percent, and it is growing by 79 percent." This, he added, showed that CIOs in China are still need of help in drawing up and planning IT infrastructures, "and are not as mature as Hong Kong-based CIOs."
"To me, that means we need to leverage our Hong Kong expertise in this area to serve my China customers," Kee added. "This is how my role of taking over China and HK will help--with these kinds of synergies."
Kee's focus on manufacturing "does not mean that we are decreasing our focus on other sectors," he added.
"Tandem, which [was] originally acquired by Compaq, has a lot of large financial and telecom customers," said Kee, who added his team recently helped the Shanghai Stock Exchange to "define the next-generation trading platform."
And with HP's huge presence in the financial and telecom sector, Kee is confident that he will give IBM a run for their money. "Although competition in financial and telecom services is high, we can't allow IBM [to] grab those markets easily, can we?" he added.