Beijing - Four years after taking over IBM's personal
computer division, computer maker Lenovo Group Ltd has been driven
back to its Chinese roots by the global economic downturn.
High-flying dreams of international expansion by the world's
fourth-largest computer maker were severely dampened as Lenovo
announced losses of 96.7 million dollars for the October-to-December
quarter and announced a return to its old Chinese management team
that built up the company.
Liu Chuanzi, Lenovo's 65-year-old founder, is returning to the
helm as chairman while 44-year-old Yang Yuanying is replacing
luckless former Dell manager Bill Amelio as chief executive.
The American's contract expired after three years, and Yang had
taken over as chairman in 2005 from Liu, who started Lenovo's
predecessor company, Legend, in 1984.
The changes heralded a shift in Lenovo's business strategy toward
the Chinese market, where business is still going strong. 'Greater
China' - consisting of mainland China, Hong Kong and Taiwan -
contributes 45 per cent of Lenovo's earnings.
'At this important time, we want to pay particular attention to
our China business, as it represents the foundation of our global
business and growth strategy,' Liu said in a statement.
Apart from China, the company plans to focus on markets in Russia,
India and Brazil and refocus on consumers, away from the corporate
market.
Lenovo has been hit especially hard by the world downturn as many
overseas clients are companies that started cutting costs by slashing
spending on information technology.
Furthermore, the personal computer maker announced restructuring
measures, including laying off 2,500 people, or 11 per cent of its
workforce internationally. Only China is to be spared the job cuts.
China remained Lenovo's strongest market. While global sales fell
by 20 per cent in the third quarter, its China sales dropped by 1 per
cent - despite an overall 7-per-cent drop in PC sales in China.
Lenovo's market share in its home market inched up by 1.8 per cent
to 30.5 per cent.
Lenovo wants to defend its position in the United States and
Europe but must not lose ground in China, its most important market,
warned Liu, who also chairs Legend Holding, which owns Lenovo.
The Chinese company's international outlook is less rosy. Since
taking over IBM, Lenovo dropped to fourth in the rankings of the
world's largest computer makers behind Dell Inc, Hewlett-Packard Co
and Taiwan's Acer Inc, which overtook Lenovo by attracting
cost-conscious consumers with its cheap, small netbooks.
Instead of launching similarly innovative products, Lenovo has
been busy - probably more so than expected - to internationally
promote its brand and merge two substantially different company
cultures.
Lenovo still operates out of two headquarters - one in Beijing and
one in Raleigh, North Carolina, the former site of IBM.
The financial crisis shattered Lenovo's dreams of an international
rise and demands a return to the company's core competencies.
'Lenovo is the leading PC maker in China,' Yang said. 'We grew our
success in China and developed our strategies for the international
market from there.'
Yang said he remained convinced that, equipped with those special
abilities, Lenovo could also grow in these difficult times in China
and in emerging markets.
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