Lenovo's internationalization process has entered a new stage

"The European and American regions have not yet made a profit. Judging from the financial data of this quarter, the challenges are greater than the previous two quarters." Yang Yuanqing said at Lenovo's interim financial report in 2006.

Yang Yuanqing believes that the reason for the weak growth in Europe and the United States is that Lenovo only saw relationship customers (large customers) before, but the growth of large customers has slowed down or even declined. Even if the overall market has remained balanced, its driving force has been Not these big customers, but SME customers. "Lenovo couldn't cover this area before, so we felt it was imperative to establish a transactional (consumer and SME) model overseas."

After the transactional model brought explosive growth to businesses in Hong Kong, India and Germany , Yang Yuanqing found that the homegrown transactional model can be successfully replicated in developed markets and become the engine of its weak business. The next step in Lenovo's internationalization is to copy the Chinese model to the world, which will become an important milestone in Lenovo's internationalization process.

In addition, starting from mid-November, all ThinkPad products aimed at individuals and small and medium-sized enterprises will be marked with the "IBM-Lenovo" dual brand. Starting at the end of the year, Lenovo's large enterprise customers will have the option to remove the IBM logo from their products. This also means that with the increase in familiarity with the international market and confidence in its own brand, Lenovo's internationalization has reached a new stage.

Copy to the world

Lenovo's second fiscal quarter (June 30-September 30) financial report shows that Lenovo Group's turnover reached US$3.7 billion, an increase of 1% over the same period last year, and the profit attributable to shareholders was $38 million, compared to just $5 million in the previous quarter. Worldwide sales of personal computers rose about 10 percent in the quarter, and cash reserves hit a record $990 million.

However, Lenovo's performance varies widely in different parts of the world. Lenovo China's PC sales rose 25 percent, outpacing market growth, with consolidated revenue of $1.4 billion, or 39 percent of the group's total. In EMEA, Lenovo's PC sales rose 5 percent, with consolidated revenue of $751 million, or 20 percent of the group's total. But Lenovo lost further share in the Americas, with PC sales down another 9 percent, and second-quarter consolidated revenue of $1.1 billion, or 29 percent of the group's total.

Lenovo's PC sales in EMEA declined 12 percent in the last fiscal quarter, with consolidated revenue accounting for 19 percent of the group's total. In Greater China, Lenovo's PC sales rose by about 30%, higher than market growth, with consolidated turnover accounting for 39% of the group's total turnover. From this point of view, the situation that Lenovo China supports the world has not been fundamentally changed. Therefore, whether or not to replicate the business model that has been very successful in the Chinese market to the world has become a core issue for Lenovo executives for a long time.

“Everyone has questioned in the past whether the Chinese model can be replicated in developed markets? If you asked me this question in the early days of the merger, I would not have dared to say it, because I did not know the details. But today I dare to give you affirmation. The answer: The Chinese model must be effective and can be replicated.” Yang Yuanqing said, “Our pilot in Germany has achieved gratifying results. In just one quarter, transactional customers have increased by 40%. This is very Convincing."

Yang Yuanqing expressed his confidence in the home-grown Chinese model, "China's transactional model is not only first-class in China, but also world-class; it is not only effective in China, but also globally. It works."

Fourth Step

In the $1.79 billion acquisition that closed in May 2005, Lenovo was granted a five-year license to IBM's trademark in addition to IBM's PC division and the perpetual right to use the ThinkPad trademark. Obviously, though, Lenovo never thought of using the 5-year license to the last second.

In early November, Lenovo Chief Marketing Officer and Senior Vice President Deep Advani stated in Singapore that Lenovo was ready to use Lenovo's own trademarks alone.

Deep Advani said the IBM logo was not removed immediately in order to keep sales steady and avoid losing customers due to "distrust of the new company." This may be confirmed from another perspective. After the test, Lenovo's reception and integration of IBM's original customers and channels has been completed. At the same time, the new Lenovo, which has completed the initial integration, already has strong financial hematopoietic capabilities.

Critics have regarded Lenovo's removal of the IBM logo as a fourth step in Lenovo's internationalization - the first three steps were replacing the 19-year-old "Legend" with Lenovo in 2003, and the acquisition was announced at the end of 2004. The IBM PC division and the successful sponsorship of the Turin Winter Olympics in early 2006.

Yang Yuanqing said that from the financial report, Lenovo's performance still has a lot of room for improvement. But the improvement does not come from reducing staff and increasing efficiency, but a major operation to fundamentally change Lenovo's cost structure, sales model, organization, personnel and supply chain, and establish a world-class business model like China. "Such a change is a painful process, please give us patience from investors," he said.

Interview

Economic Observer: When will Lenovo's global reputation be as high as it is in China?

Yang Yuanqing: Lenovo still has a long way to go to build its brand. To achieve the same popularity in China, it is not a matter of one or two years, but a matter of five or ten years. But I think we are quite confident. Because we have great products, Think products and Lenovo products are world-class. We have a strong business model. These interactions go a long way towards building a global brand.

Economic Observer: Why was the decision to gradually remove the IBM logo taken recently?

Yang Yuanqing: This is something to be done sooner or later. We cannot lie on the IBM brand forever.

Economic Observer: Looking back, what does Lenovo think about its acquisition of IBM?

Yang Yuanqing: The first phase of the acquisition was very successful. This was mainly due to the solid preparations and the synergies that should be realized. We have followed the steps to integrate, so we have maintained stability, and no major accidents have occurred, and we also believe that there will be no major accidents. However, to further improve our performance, it is not a simple synergy effect, which can be achieved by reducing a little headcount. We must make big changes, in terms of business model, organization, process, and personnel. It's not a matter of three days or two days, it's more difficult than doing it in a country like China. I think it is satisfactory that we can achieve a current operating situation, and I am even more satisfied that we have seen the next step. The real problem is that we need time.