Bloomberg News

HP Turning to Chinese to Develop Products for Emerging Markets

June 29, 2011

June 29 (Bloomberg) -- Hewlett-Packard Co. is turning to China for engineers to develop global storage and networking products, opening a new research center in Beijing this year as it seeks to boost sales in emerging markets.

“It is in China, for China, but also for the world because the R&D capabilities here in China, we want to leverage for other markets as well,” Chief Executive Officer Leo Apotheker said today in Beijing. He declined to say how many employees would be hired or how much the center would cost.

The world’s biggest computer maker also said it is accelerating its investments in cloud computing and social media in China, betting the country’s five-year plan will lead to more investment in servers and networking gear. Apotheker, 57, took leadership of Palo Alto, California-based HP on Nov. 1 and has said he plans to expand internationally, boost software revenue and speed product development to counter slowing sales growth.

“In China, you can develop a certain number of technologies that are particularly well suited for other fast- developing markets that have similar characteristics,” Apotheker said in an interview after a press briefing in the nation’s capital. “We already do some research in China, and we want to expand this right here in Beijing so that we can actually have even more leading-edge technology that we can drive out of China.”

Shanghai Factories

Apotheker spoke at the end of a four-city trip to China that also included the announcement of a new cloud computing center in Tianjin and an expansion of manufacturing in Shanghai.

Sales in the so-called BRIC countries rose 19 percent in the fiscal second quarter, and Brazil, Russia, India, and China accounted for 12 percent of revenue, or $3.76 billion. Total revenue this fiscal year is expected to increase 2.5 percent to $129.2 billion after rising 10 percent in the 12 months ended in October, according to the average estimate of 33 analysts surveyed by Bloomberg.

Apotheker has also shuffled executives to push for more growth in China. Todd Bradley, head of the company’s personal computer group, took on additional responsibilities on June 14 to extend the company’s market share in the world’s fastest- growing major economy. On June 20, HP named Steve Gill, who has been with the company for more than a decade and has managed operations in Korea, the U.K. and Ireland, as its new managing director for China.

HP entered China in 1985 and now has about 20,000 workers there, Apotheker said. The new initiatives will increase the number of employees in the nation, he said, declining to provide an estimate for how many will be added.

Before arriving at Hewlett-Packard, Apotheker resigned as CEO of German software maker SAP AG amid falling sales, clashes with unions over job cuts and a price increase that vexed customers.

--Edmond Lococo, Aaron Ricadela. Editors: Dave McCombs, Terje Langeland.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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