HP will not downsize its Chinese workforce

Hewlett-Packard Co, whose personal computers are the most frequently shipped in the world, has no plans to reduce the size of its Chinese workforce after the merger of its printer sector and PC sector, the company's CEO said on Wednesday.

Hewlett-Packard has just signed a memorandum of understanding with the Chongqing municipal government to build a new printer factory, Meg Whitman, the top executive of the US-based company, said during her first trip to China since taking the helm at the company seven months ago.

Her trip follows visits made by CEOs of other prominent US technology companies. Tim Cook, the CEO of Apple Inc, and Mark Zuckerberg, the CEO of Facebook Inc, both came to China last month.

One of the first decisions Whitman made at Hewlett-Packard was to stop a planned spin-off of the company's PC business, a proposal put forth under her predecessor, Leo Apotheker.

Last month, Whitman decided to combine the company's imaging and printing group with its personal systems group.

According to the company's financial report, the two divisions, known in their combined form as the Printing and Personal Systems Group, are the source of about half of HP's annual sales.

"We are a hardware company," Whitman said. "Seventy percent of our sales revenue comes from hardware, and we are proud of it."

She said she is not in favor of making Hewlett-Packard into a software company.

She said an even larger percentage of the company's sales in China comes from hardware sales. The nation buys more PCs than any other country.

"China is already the biggest market for monitors and desktop PCs as a result of its rapidly developing economy and buyers' larger disposable incomes," said Robin Wu, an analyst from the US-based research company DisplaySearch.

Even so, Hewlett-Packard's share of the Chinese PC market has decreased by about 50 percent in the past two years.

According to the US-based IT research company IDC, Hewlett-Packard held only about 5.26 percent of the market in the last quarter of 2011, down from the roughly 11 percent it had held in the same quarter of 2009.

Whitman said HP will place a greater emphasis on gaining back a larger percentage of the Chinese market, investing more into PCs and printers and rebuilding its brand.

She said the merger of Hewlett-Packard's PC and printer business will make it easier for government, businesses and customers in China to buy products that fall into those categories in a bundled-together form.

"I don't anticipate downsizing in China but want to hire more talent because it is an enormous market," she said.

Hewlett-Packard has two PC manufacturing bases in China, one in Shanghai and one in Chongqing.

The Chongqing factory, built in 2010, can produce 4 million units a year. More than 90 percent of the company's inkjet printers and 70 percent of its LaserJet printers are made in China.

During her trip, Whitman went to the HP research and development center in Shanghai and met Yu Zhengsheng, Party secretary of Shanghai.

On Tuesday, she met Zhang Dejiang, secretary of the Communist Party of China Chongqing Municipal Committee, and signed an MOU to join the local printer production base that could result in 30 million printers being produced annually.

"We will introduce more PC products to the Chinese market. such as a Microsoft Corp's Windows 8-based tablet PC later this year," she said.