Chinese electronics retailer Suning has signed a direct supply agreement with HP, making it the only direct supply channel provider for HP in China.

With the agreement, the two parties are expected to achieve annual sales of CNY1.5 billion in 2009 and total sales of over CNY5 billion in the next three years.

Sun Weimin, president of Suning, told local media that the establishment of a direct supply model with manufacturers will be a focus in the future development of home appliances channel providers.

According to HP, the direct supply model will shorten the supply chain, so as to lower the prices of products. In Europe and the United States, HP already adopted the direct supply model long ago and supplies its products to major retailers directly. With the gradual maturities of the Chinese consumer market and channels, the company hopes to launch this direct supply cooperation in this marketplace to optimize its supply chain.

Prior to the signing of this agreement with Suning, HP distributed products through its nationwide general agents in China.

So far, several other technology companies, including Lenovo, Dell, Hasee, and Tongfang, have also reached direct supply cooperation with Suning.