Gateway 2000 shows new Asian hustle

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SAN FRANCISCO - Gateway 2000 is playing catch-up ball with direct sales PC leader Dell in South Asia.

Robert Chu, hired away from Dell last summer to lead Gateway's Asian turnaround, admitted as much at last month's Asian DM conference held here under the sponsorship of USPS's International Business Unit (IBU).

Gateway 2000 is active in 160 countries, had revenues of $6.3 billion last year, ranks 9th overall among global computer manufacturers and second in direct sales, but has not yet established an Asian network to rival Dell's.

Chu is trying to change that even if it requires some unorthodox methods for a direct seller. He has copied the "country store" model Gateway has used in the US in Asia, setting up retail outlets in Australia, Japan and Malaysia.

"We set up our first stores in Tokyo and Sydney and now have four in Australia and one in Kuala Lumpur and plan to open another three in Malaysia." Gateway anchors its Asian operation in Malaysia.

The stores, Chu said, were well received in Asia because their message of "family values" played well in the region. Each store has about 2,000 square feet and each potential customer can talk to a sales person one on one.

"Service support for PCs is the Achilles heel of our business in the Asia-Pacific region. It is poor and Gateway is trying to improve that situation."

Chu said Gateway 2000 was using off-the page ads and direct response radio to drive traffic into the stores, which sell made to order Gateway computers only.

He expects to have an Internet site set up in South Asia within three months and said the web would help push browsers to the stores as well as selling computers directly on line.

This has been a very successful business for Gateway, as it has for other direct sellers. Worldwide Gateway 2000 "does $4 million on the Internet a day, up from $2 million just a year ago."

The company intends to complete globalization of the web. "We already have sites that are language specific for sales, services and ordering. We will do that in Asia."

Chu noted that the Internet is cheaper to use and that in the Asia-Pacific region especially it offered significant savings on long-distance calls.

The company has a call center in Kuala Lumpur and a manufacturing facility two hours from the Malaysian capital. "You can reach a large part of the Asia-Pacific region from one call center," Chu maintained.

But so far Gateway is active in only five countries - Malaysia, Singapore, Japan, Australia and New Zealand - compared to the ten where rival Dell does business.

Asia's lingering economic crisis, he maintained, has hurt direct sellers less than it has other companies. "We have an inherent advantage during bad times."

Gateway, he noted, carries no inventory, since it builds computers to order, and therefore has no obsolete product. As a result changes in the dollar rate do less damage and "we can be aggressive on price."

Still, the crisis has delayed expansion plans. Chu still expects to open in Thailand fairly soon, but conceded he would hold back on China and Korea for a year, and not open in Hong Kong for another six months.

Gateway 2000 uses direct mail to sell computers but does not rent lists, "because there are so few good lists, so we are building our own through off-the-page ads, radio and our buyers." Nor does it use DRTV although it ran some TV spots in Australia and Japan.

Advertising, however, is only used in countries where Gateweay has direct operations. In Pakistan, for example, the company has a network of resellers
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