New Delhi: Computer maker Lenovo Group Ltd is keen to replicate in India its success in China. Lenovo is China’s best-selling PC brand, a position it has maintained for the past 13 years. India, with 7.5 million PCs against China’s 40 million, offers a huge potential to Lenovo, according to CEO Yang Yuanqing. Lenovo is looking at increasing its market share of 4.7%, as reported by International Data Corp., for the first quarter of 2009.
Tapping potential: Group CEO Yang Yuanqing says Lenovo is looking to replicate its success in the Chinese market here as well. Harikrishna Katragadda / Mint
In the past few months, Lenovo has been implementing a new marketing strategy in India. The firm recently launched seven new products across multiple segments.
In an interview, Yang talks about the firm’s recent reorganization and its evolution in the face of swinging growth numbers and a global economic downturn. Edited excerpts:
How is Lenovo’s reorganization panning out?
It is very important for us to reorganize our strategy; for different markets we should have different strategies. For mature markets, I think our priority should be to (protect) market share and turn around the business.
In the global economic downturn, the business of global, large enterprises is swinging (indicates a downturn with his hand) so we lost money for a couple of quarters. We decided we must turn this around, that’s why we did the restructuring earlier this year.
We have two areas to protect—one is the China market where we are in the leadership position, and the second is the global enterprise segment where we want to protect our share.
But we must also have a new strategy to extend into new areas…to ensure that we can have sustainable growth in the future. Look at it in terms of a boxer who uses his left hand to protect his heart and head. We have to have a right hand to attack, which is emerging markets and mature transactional (consumer) markets.
Has the reorganization helped bring down costs and increase efficiency globally?
The (enterprise) business is shrinking by 30-40% but our older structure was based on higher volume and higher scale. So we had to cut down the head count to meet these new scales.
Supply chain, service, among others...still have room to improve; not only to reduce the expense to revenue but also to improve customer satisfaction and overall efficiency of management.
If you can have a better IT system, then you can see your inventory on a daily basis and it also allows you to react to market competition quickly. You can take the correct decision, that is very important. We think we have a lot of room in this aspect and we expect to improve this in the future.
What are your targets for the India market?
(We have) very ambitious targets—we are not satisfied with our current position and market share. We shouldn’t be. Unfortunately, for the past couple of years we didn’t execute our strategy well. This is not just an issue with our Indian team, but also an executive (management) issue as well.
But (now) I think we have formed a very good team here. I hope this team will be a very stable team for a long time. Certainly, we will have people from other countries come here to help them build the foundations from a long-term point of view. We want to train more local teams and let them lead the business. We also want to export talent.
So, would you, say, aim to double your market share?
I wish our team could take that challenge given that our market share is not that high. It is possible. Three to four years is absolutely my expectation and it is quite possible.
How easy is it for you to differentiate your products in emerging markets?
Our Thinkpad (a notebook computer series targeting business customers) is already a premier product. We want to keep this strategy. Meanwhile, we must introduce more consumer products. We can have some differentiation in this area as well.
Then, for example, we want to introduce mobile Internet devices in the future to address the needs of the customers in markets such as India (the fastest growing mobile phone services market in the world). We are still in the development area of this product so I can’t say more at this juncture. You will see more and more consumer products, in China first, and then later we will introduce (them) to other markets.
Do you foresee any benefits of local manufacturing in India apart from the unit in Puducherry?
We must meet customer demand. If local manufacturing can help us realize that target then we absolutely would do that. Local manufacturing could certainly help you deliver quickly to meet customer needs. But we must consider the efficiency as well.
The acquisition of International Business Machines Corp.’s (IBM) PC division helped you on the global stage. But, with hindsight, would you do the acquisition any differently?
It is a step-by-step process. You have to stabilize a team and stabilize the business first, but after you finish this stage you must quickly move to the next stage—to design a new strategy not only in your current core business but also expand into other areas to gain even a higher scale.
Over the past four-five years, actually, we haven’t gained any market share. I think if we could pay more attention to the expansion, to building of the core competence, we could have (a) better market share.
What is your vision for Lenovo 10 years down the line?
I wish we would become the leading company in this industry—not just in terms of market share, but also be a leading innovation company, a worldwide respected international company.
We want to build a built-to-last company. We want to become a very healthy company with healthy profitability so that our share price could go up significantly.
Do you see the industry gravitating towards the mobile Internet device and such?
Overall, we see the following three directions. The first is digital—with new technology—the living room will change. Maybe in the future, watching TV will change with Internet developments.
The second is mobile Internet—maybe a smaller form factor with different operating systems and different user interface will become more and more popular.
Cloud computing will become more and more popular, changing the enterprise segment.
Any lessons to be learnt from the differences and similarities between the Indian and Chinese markets for your products?
We want to replicate our success here as we have done in China. We have a much higher market share in China. We have very good brand awareness, reputation and loyalty in China so it is easier for us to launch new products, to introduce new devices.
Then we could understand what our strengths and weaknesses are. We could replicate in other markets as well.
Give it time and we will have the similar market share, brand recognition and similar influence here (in India), so that we can launch our new products or business simultaneously in China and India—that is our target.
The opportunity is that India has just 7.5 million PCs compared with China’s 40 million.