Increasing Broadband Internet Penetration
In the OIC Member Countries
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receive computers free of charge. The third type of initiative entails a reduction of the access
price by eliminating or decreasing taxes paid at time of purchasing. Levies affected by this
measure could range from sales tax, import duties, and even sector-specific levies.
In 2009, more than half of China’s population lived in the rural parts of the country, where the
average per capita annual income was US$ 700 (25% the average income of urban residents),
broadband penetration rates were lower than in the urban areas, and the personal computer
market was nearly untapped. Further, PC shipments decreased globally and spending fell.
To stimulate rural spending, the Chinese government launched a subsidy program offering a
13% rebate to rural residents buying select products to help PC manufacturers increase their
sales to the country’s under-developed regions, particularly after national computer demand
fell. The rural computer subsidy came as part of a larger US$ 586 billion subsidy program to
increase demand for home electronics, known as the Home Appliance Subsidy Program.
The government identified 14 vendors that could participate in the program and sell low-
priced PCs in rural China, making computers more affordable while also spurring industry
competition. These manufacturers created special products for the program with two-thirds of
the computer models priced under US$ 500. The products also met regional specific demands.
The PCs, for instance, kept potential variations in power supply voltage – a frequent problem
in rural areas – in mind. Further, many of them came with special software for farmers, like
inventory management programs. Vendors also ensured physical proximity to their customers,
as citizens in rural areas did not have the means or the desire to drive for hours to buy a
computer.
Hewlett-Packard sponsored variety shows and film screenings and offered product
demonstrations in small towns. It also sent buses equipped with its products to elementary
schools to advertise and to train students on how to use the technology. Competitor Lenovo
began marketing its computers as luxury wedding gifts, employing the slogan, “Buy a Lenovo
PC, Be a Happy Bride,” and delivering them in large, conspicuous boxes. The company also has
a flashy showroom with a section of the store devoted to products designed specifically for
rural use.
Nearly 60% of all rural residents – or 200 million households - qualified for a subsidy. Initial
estimates expected the program to generate the sales of 800,000 computers. The program
ended in early 2012 and was dubbed a success. Combined, the subsidies covering all electronic
goods for farmers and rural residents generated a 53% increase in sales30.
3 China." Tech Journal. Wall Street Journal, 24 Sept. 2009. Web.
>.
L ubsidy for Farmers." Desktops. PCWorld, 5 Mar. 2009. Web.
Increase PC Shipments in 2009 | 909330." Gartner, 10 Mar. 2009.
" nsider. N.p., 18 Jan. 2012. Web.
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