Stung by losses, Lenovo turns focus back to China

Hit by a sharp decline in sales and heavy financial losses, Lenovo Group's new management team is turning the company's focus back to China.

Hit by a sharp decline in sales and heavy financial losses, Lenovo Group's new management team is turning the company's focus back to China.

"With the changes in the macroeconomic environment, our business in EMEA (Europe, the Middle East and Africa) and the Americas has been impacted greatly, so our company is increasing its focus on China, as well as emerging markets," Liu Chuanzhi, the company's newly reinstated chairman, told reporters during a conference call.

China is Lenovo's most important market, accounting for 45 percent of the company's sales during the most recent quarter.

Lenovo took observers by surprise on Thursday with the announcement that President and CEO William Amelio had resigned at the end of his three-year contract, which ended in December. Amelio, formerly the president of Dell's Asian operations, led Lenovo through an ongoing restructuring program designed to improve the company's competitiveness.

Amelio was replaced by Yang Yuanqing, who will step down from his current position as chairman of Lenovo to take on the CEO role. Liu, the company's founder and former chairman, returned to his former position and Rory Read, Lenovo's senior vice president of global operations, will take on the role of president and chief operating officer.

At the same time that Lenovo announced Amelio's departure, the company reported a quarterly loss of $97 million on sales of $3.6 billion, which represented a decline of 20 percent compared to the same period during the previous year. Whether a renewed focus on China will help Lenovo reverse its fortunes in the short term remains to be seen: the company singled out a drop in Chinese demand for PCs as a primary reason for the lower sales and financial losses.

"It's going to be tough in any of these markets, including China," said Bryan Ma, director of personal systems research at IDC Asia-Pacific. "Given their strength in China, I can understand why they want to focus on this area."

In terms of emerging markets outside China, Lenovo needs to focus its efforts on key markets, Ma said, noting that Lenovo's business in India suffered badly during the last quarter of 2008.

Lenovo's management also needs to realize that low prices alone will not be a guarantee of success in emerging markets. "It's more about value. It's critical they don't go into these markets looking only at price," Ma said.

Bringing Yang and Liu back to their previous positions echoes the earlier returns of Michael Dell to Dell and Steve Jobs to Apple during periods when these companies struggled to compete. But Yang and Liu, who ran the company at a time when its sales were largely confined to China, return to a dramatically different company, thanks to the 2004 acquisition of IBM's former PC division.

For the past four years, two Americans have held the CEO position at Lenovo, Amelio and predecessor, Stephen Ward, who became CEO immediately following the acquisition. Ward resigned in late 2005.

To be successful in their bid to revive Lenovo's fortunes, Yang and Liu will still have to improve the company's position in the worldwide PC market, not just in China. When Yang and Liu announced plans to acquire IBM's PC division, they said the deal would turn Lenovo into an international company and allow it to better compete against multinational vendors Hewlett-Packard and Dell.

That is still the company's goal, Liu said.

"We are enhancing our foundation in China so that we can have further development in the future in those mature markets. We will try our best to protect our market position in the U.S. and Europe," he said.

Yang echoed that sentiment. "I'm the CEO of this company. I still want this company to be a global company," he said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags ChinaLenovo

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sumner Lemon

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?