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Second-Tier China Market Powers Up IT Device Sales

Stocks in this article: HPQ DELL AAPL

Next, in order of popularity, are mobile PCs, media tablets and desktop PCs, she says. Mobile PCs, presumably laptops, are selling because their multiple functions can be shared within a family, Tsai adds.

Their relatively large screens make them more attractive than tablets for hours of videos and Internet surfing. Ultrabooks, which are lightweight, thin PCs with strong processors and long battery life, are just beginning to make an impression in mid-tier Chinese markets, she says.

"The overall purpose is to improve the life quality, education and entertainment," Tsai says, suggesting that companies keen on the middle-China market boost their brand recognition and customer service.

An on-the-move local favorite is Beijing-based, Hong Kong-listed Lenovo (0992.HK). Lenovo had a 13% market share across China as of August, putting it just slightly behind market leader Hewlett-Packard (HPQ). This year, Lenovo shares reached their second highest prices since 2007.

Lenovo already owns the venerable IBM's (IBM) old PC division. As a Chinese brand, its devices are easy to find and with plenty of after-sales support. My laptop benefited liberally from that support, a reason it still works nine years after I bought it.

Asustek Computer (2357.TW) is also moving fast into China. The Taipei-based, Taipei-listed manufacturer's laptop can reach China, if not made there already, faster than U.S. rivals. While unit prices are hard to undercut it's another big deal for middle-tier Chinese buyers. Its CFO said in August he expected the company to grow its China market share to 14%. Asustek share prices have climbed steadily this year so far after going nowhere in 2011.

Lenovo and Asustek are also pushing media tablets to rival the pricier but more iconic iPad and Android-based smartphones to deepen a dent in iPhone sales.

Fairer prices could raise either firm's market share if the devices survive dinner-table product reviews. Middle class buyers in China usually decide what to buy by asking friends what brands they use and then choose either that -- or one almost identical to it on the surface -- as soon as they find a price that works.

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