07/01/96 GIVING MEXICANS MORE PC FOR THEIR PESO (int'l edition)

GIVING MEXICANS MORE PC FOR THEIR PESO (int'l edition)

At a Club CompuPrice in a middle-class section of Mexico City, Jaime Merino and his father watch as a clerk demonstrates an Acer Aspire home computer. But Merino, 17, who starts college in the fall, needs no convincing. ``It's the cheapest and most complete,'' he says, with the confidence of a consumer who has done his research. His father willingly forks over $1,850.
That's a tribute to the costly but effective three-year marketing campaign that put Acer at the top of the Mexican personal-computer market in 1992--where it remains. One of every three PCs sold in Mexico is an Acer, giving it a 32% market share that far outstrips competitors such as IBM, Compaq, and Hewlett-Packard.
Now, Acer is trying to repeat that success throughout Latin America. The Taiwanese computer maker and its Mexican partner, Computec, have created a new venture to handle assembly, marketing, and distribution for all of Latin America.
The story of Acer's success in Mexico is also the story of how Acer Group Chairman Stan Shih's global strategy is paying off. When Armando Jinich and two partners formed Computec to distribute Acer computers in 1989, they found a gap between the high-priced PCs that IBM and HP were selling to the corporate market and the low-quality clones aimed at private consumers. Acer zeroed in on the small-business and home-PC markets. The joint venture with Computec, formed in 1992, invested heavily in marketing, making Acer the first computer brand to advertise on Mexican TV.
LOCAL LATITUDE. By the time the PC price wars spread to Mexico in 1993, the company had started assembling its products in an industrial suburb of Mexico City. That gave Acer a critical edge, says Jinich, Mexico general director of Acer Computec Latinoamerica. Local assembly allowed Acer to hold prices low and keep pace as technology moved rapidly. Rather than waiting to import finished computers with up-to-date components, the local plant is merely substituting components such as microprocessors and hard disk drives that become obsolete quickly.
With great latitude from Taipei, Acer's management in Mexico has been constantly revising tactics--it has had little choice. When the peso began a free fall in December, 1994, and the economy sank into recession, Acer broke with the custom of quoting prices in dollars and listed in pesos. Many companies tightened marketing, but Acer kept buying TV time and launched its new AcerPac multimedia model. As the computer market shrank by 40%, Acer began to target new customers, winning contracts to supply Mexico's state-owned power company and the country's main public university, the National Autonomous University of Mexico. ``We had great flexibility to make decisions and respond quickly to the market,'' says Jinich.
The next step: manufacturing components and subassemblies such as monitors and motherboards, probably on the U.S. border, for the North American market. If Acer's success in Mexico is any guide, Latin America will be a market eager for the company's newest products--and a key part of Acer's strategy to become a world computer superpower.
By Elisabeth Malkin in Mexico City