INDIA ON TOP OF AGENDA FOR CHINESE COMPUTERS
Chinese no longer consider India as competitor in Global business but considering them as their partners in some of the Global businesses which can emanate from India as joint ventures. In this article we are starting our discussions with Lenovo computers of China.
The Chinese are equally good at brand building. Take the case of their Lenovo computers. The Chinese computers, communications and consumer products major surprised everybody with that ambitious acquisition of IBMâ€™s personal computing business exactly a year ago, sponsored KBC-2, brought together the lively brother-sister duo of Saif and Soha Ali Khan as its brand ambassadors, promoted sporting events, and the results are already showing. IDC estimates that in less than a full quarter of launch, Lenovo has achieved no.4 position in India in the consumer PC category and even more enviable positions in customer satisfaction rankings in desktops and notebooks. Lenovo chairman Yang Yuanqing now on a visit to Banglore shares his India plans and restructuring initiatives in an exclusive interview.
India is a very important market for Lenovo. Itâ€™s a high growth market. The market is also similar to Chinaâ€™s, so we can replicate what we are doing in China. According to IDC figures, our shipments grew 56.5% and revenue grew39% in 2005-06, compared to last year. This is much higher then Industry growth rates. Itâ€™s one geographical area where Lenovo and IBM products now command equal share. Small and medium businesses, SOHO clients and home computing are going to be our key focus areas here.
Lenovo plan to increase their manufacturing capacity here in India. They have some concrete plans. The growth in India is so fast that expansion has to happen. Currently Lenovo has their plant at Pondichery in India.
Lenovoâ€™s global focus following the acquisition of IBMâ€™s PC business is moving some of our business units from high cost locations to low-cost geographies like India and China. They have invested already $100 million towards organizational restructuring. This means strengthening their front-end including sales, marketing and support. Overall, these initiatives will save according to Lenovo about $250 million a year in operational costs.
The US state department has alleged that Lenovo computers pose a threat to national security and has restricted their use. Lenovo considers this as tough. There are challenges for Chinese companies to expand globally. The chairman said that it needs to have more communication with the US government, convince them that itâ€™s totally market driven company. We are not controlled by the Chinese government. The Chinese Academy of Sciences, a technology outfit of the government, holds 27% in Lenovo, IBM still holds 11%, three private equity companies hold 12%, and the rest is with the public. So, the message is that they are an independent company.
Even China now recognizes the huge potential India has as a consumer. Not alone this China is willing to invest in India so that they can market their products manufactured in India competitively in Global markets. Chinese manufacturing infrastructure and scope of marketing within their own country is more or less saturated whereas still there is ample scope in India. The trend seems to India may be recognized shortly emerging as the hub for manufacturing of automobiles, Textile yarns, software and hardware, earth moving equipments etc.