HP plans to fight Chinese on their own turf

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Hewlett-Packard (HPQ) has been faced with an onslaught of netbooks from manufacturers in Taiwan and China, led by Asus and followed by Acer and Lenovo. The netbooks cost only $300, and when they use Linux instead of Windows, the price is often even less.

Netbooks do not carry big margins the way desktops and higher-end notebooks do. The option of buying smaller machines from China squeezes HP's sales and net.

In a case of "turnabout is fair play," HP will begin an aggressive program to market its new line of netbooks to the lower end of the consumer market in China.

According toThe Wall Street Journal, the big U.S. PC company will team up with China's largest mobile carriers to sell its machines, which will be set up to run on the wireless networks. The paper writes, "Isaiah Cheung, vice president of the Personal Systems Group for the company's China and Hong Kong operations, said sales growth in China will shift toward lower-tier cities, and sales in rural China will grow over the next three years."

The plan is a smart move by HP. China's big mobile carriers have huge distribution systems in the country. The largest of them, China Mobile (CHL) has over 300 million subscribers, a customer base that would be the envy of any consumer electronics company.

Chinese PC companies may be invading the U.S., but HP has set itself up to return the favor.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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