Hewlett-Packard Co plans to operate a computer manufacturing plant in China's Chongqing municipality, expanding its presence in Western China in order to better serve the local market.

The Chinese government will build the 20,000-square-metre facility in Chongqing, HP said. The company plans to make notebook and desktop PCs, according to the terms of a memorandum of understanding with Chongqing municipality.

China, the world's second-largest personal computer market by unit sales, is dominated by Beijing-based Lenovo Group.

"When in full operation, the HP-managed plant is expected to have the capacity to meet market demand in Chongqing as well as other parts of China across government, public and retail sectors," HP said in a statement.

A spokeswoman for HP, the world's biggest computer maker, said the company gets products from China via plants it runs and from its original equipment manufacturing partners.

HP, which says it is the leading foreign manufacturer of PCs in China, said it expected manufacturing operations at Chongqing to begin in 2010. The company also has manufacturing operations in Shanghai.

China, trying to ease the gap between its booming coast and vast interior, is encouraging companies to make investments in the central and western parts of the country.

Countries like Brazil, Russia, India and China -- the "BRIC" nations -- have supported global sales for HP, Dell Inc and many other big technology companies. 

Todd Bradley, executive vice president of HP's Personal Systems Group, told reporters in Beijing on Friday that the investment underlined that HP would continue to focus on its long-term expansion plans, despite the economic uncertainty caused by the recent global market turmoil.

"We manage our business very conservatively on a day-to-day basis. We're certainly aware of the current situation. But our responsibility is to take that awareness in the short-term and manage it so we have long-term profitable growth," Bradley said.

"We are very excited to be expanding into western China -- we see it as an enormous opportunity," he said. He declined to provide any financial details on the new plant.

Source:Reuters