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Last updated: September 14, 2005 6:58 pm

Lenovo to focus on growth

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Lenovo, China’s biggest computer maker, aims to grow at twice the industry growth rate over the next five years, according to its chairman, Yang Yuanqing.

Lenovo, which acquired IBM’s loss-making PC division, including the ThinkPad range of high-end portables for $1.25bn in May, is already the third largest PC maker behind Dell Computer and Hewlett-Packard, the US market leaders.

But Mr Yuanqing said Lenovo planned to outpace the industry. “In the next five years the new Lenovo will become the most competitive PC company and the best PC brand in the world,” he said. “We may have new growth drivers beyond the PC by then,” he suggested, hinting that Lenovo, which already sells a wider range of consumer products including mobile phones in China may eventually broaden its product offerings in other markets.

For the time being, however, the Lenovo chairman said the Chinese group planned to grow by focusing on innovation in the PC market and targeting high-growth market segments including consumers in developing markets and the mobile and small business segments in more mature markets.

Mr Yuanqing added that Lenovo planned to consolidate its manufacturing operations in China, where it has four plants, to lower costs and to target consumers and very small businesses in emerging markets. The company planned to use its new economies of scale to increase efficiency while leveraging its Chinese operations to reduce its expense-to-revenue ratio, he said.

Last month Lenovo, which employs about 27,000 people worldwide, announced that its share of the market in China grew during its fiscal first quarter. “In a space where people say PCs are a commodity, we say innovation matters,” said Deepak Advani, Lenovo’s chief marketing officer. “What we are about is growth. Focus on existing customers is priority number one.”

Mr Advani said Lenovo, based in Beijing, planned to boost sales of its award-winning ThinkPad notebooks in the US and PCs in emerging markets.

As part of its efforts to boost market share in China, Lenovo planned to open 800 franchise stores by year-end, bringing the total to 5,500, said Stephen Ward, chief executive, at a conference last week. Lenovo also has opened 70 stores in India.

Lenovo has rights to use the IBM brand on its notebook and desktop PCs for five years but said it planned to phase out use of the IBM brand and boost use of the Lenovo and ThinkPad brands gradually.

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