EMC Looks to Digital China for Servicing

Posted on March 27, 2008
Filed Under China Business, China Distribution |

Digital China announced that it will set up a joint venture company with American storage giant EMC (EMC) to carry out solutions and services as well as acquisitions in China.

This is the first time that EMC has carried out a marketing and sales initiative in the Asia Pacific region by means of a joint venture.

Named Digital China Yi An Xin Information Technology Co., Ltd., the company will be registered in Hong Kong but will have offices in both Beijing and Hong Kong. All the registration will be done before the end of April. Each party will hold 50% of the stake in the company for which the parties have not disclosed the investment amount or employee numbers.

Ye Chenghui, president of EMC Greater China, says that the joint venture company will help EMC China R&D Center complete its local solutions and the testing and integration of EMC storage system and software. Ye says that these solutions will be pushed to market by EMC sales team and its partner network with Digital China providing the concerned IT service.

In recent years, global IT giants have begun to enhance their relationship with their Chinese partners by buying the partner’s shares or setting up joint venture companies with them. This is one way they can stop their competitors from cooperating with their business partners.

Most foreign companies in China, including EMC, have eschewed joint ventures in recent years. Relations with partners can be problematic and WOFE (wholly-owned foreign enterprise) registration is now relatively easy. However, Digital China has a long-standing predisposition towards joint ventures. They’ve used them to expand domestically without building their own organizations in local markets.

The joint venture has little to do with localization, EMC already has the resources in China to do that. It’s all about guaranteeing access to Digital China’s growing service delivery capability. Digital China is committed to moving away from the low-margin distribution business to the fatter profits in services.

The marriage is based on mutual need: EMC has relatively complex solutions that require expertise to implement; Digital China needs complex solutions for its consultants to deploy.