Tsinghua Tongfang, which seems closer to its university roots than a slick battler in China's personal computer wars, said last week it aims to leapfrog into second place among mainland PC vendors this year.

Tongfang chief Lu Zhicheng said the company intended to sell about 1 million PCs this year, roughly double its 2001 total, as it looks beyond saturated urban centres to secondary cities and rural areas.

Analysts said that while Tongfang's PC business has grown rapidly, its sales projections sounded ambitious.

"We hope this year we can surpass them," Lu said, referring to China's No 2 vendor Shanghai Founder.

China's PC market, expected to surpass Japan's next year as the world's second largest, is dominated by the Legend Group, with a 28 per cent stake, according to research firm International Data Corp (IDC).

Founder occupies a distant No 2 position, followed by International Business Machines, Dell Computer Corp and Tongfang. Unbranded PCs account for another 28 per cent of the China market, where about 9.9 million PCs were sold last year, IDC said.

Lu said Tongfang had a market share of about 6 per cent last year and hoped to boost that to 8 per cent in 2002.

Analysts said Tongfang is growing quickly by selling to the low-margin schools and universities segment.

Tongfang seems an unlikely candidate to vie with the likes of Legend and Dell in China's PC market, which IDC expects will grow at 15-20 per cent a year over the next five years.

Indeed, computers aren't even Tongfang's main business. Its primary focus is environmental engineering technology. Of 2,600 Tongfang staff, only 600 are in its PC business.

Turnover last year was just over 5 billion yuan (US$600 million), 40.7 per cent of which came from computer business.

But Tongfang sees a growing niche for itself in PCs.

Lu said Tongfang must build relationships in the government and corporate markets to make inroads against bigger rivals.

(Business Weekly news 02/07/2002)