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Lenovo Consolidates with IBM
2005-10-01 10:57:52      China Daily
Computer giant Lenovo Group has sped up consolidation with IBM's PC business

It has also formed a unit in India to transfer its success in China to other emerging markets.

Yang Yuanqing, chairman of Lenovo, the world's third largest computer maker, said his company would start the second stage of the consolidation process from October 15 eight months ahead of schedule.

The Chinese firm acquired IBM's personal computer business in December, including the famous Think brands of notebooks and desktop computers.

During the first stage of the consolidation process, Lenovo Group's original business and the former IBM business ran separately under the names Lenovo China and Lenovo International to avoid drastic changes to customers and the organization of the company.

"The process will take at least five months, so we can have a smooth operation in organizing the management and a stable increase in our business in domestic and international markets," Yang said on Friday.

Chen Shaopeng, vice-president of sales in the Chinese market, said there would not be any layoffs in the consolidation in China, where Lenovo and IBM had two separate groups of staff, distribution channels, and management teams.

Eagle Zhang, general manager of the domestic research house Analysys International, believes Lenovo's successes in the first half of this year made the company confident in accelerating consolidation.

"It is just like the usual Lenovo tactic: first test the water and then push it aggressively," said Zhang.

According to international market researcher International Data Corp, Lenovo's shipments grew at three times the market average in the second quarter and its market share reached 34 per cent in China.

Lenovo says it will build a unified management platform for product design and development, supply chain, and sales.

Yang said his company also saved US$10 million in May and June thanks to the integration of procurement for Lenovo and Think products.

The Chinese computer giant will also reorganize its regional organization and set up five regional headquarters. As well as existing bases in the United States, Europe, the Middle East, Africa, and the Asia Pacific region, Lenovo will set up a China regional unit, a result of the consolidation of Lenovo China and Lenovo International. The company will also set up an HQ in India, highlighting the importance of emerging markets like India, Russia and Brazil.

Yang said he had just visited India and Dubai in the United Arabic Emirates and is confident the emerging markets will become growth engines for his company, with Lenovo transfering its success in China to similar developing markets.

Lenovo's parent company, Legend Holdings' investment arm Hongyi Investment Co Ltd, has invested 210 million yuan (US$26 million) in East China's Jiangsu Simcere Pharmaceutical Company.

The two companies reached an agreement on Hongyi's investment on Thursday in Nanjing. Hongyi controls 31 per cent of stakes in Simcere, while the rest is still owned by former shareholders with Simcere.

(Photo source: Reuters/Lenovo Chairman Yuanqing Yang (L) and Vice President of Marketing Philippe Davy in New York, September 13 2005.)

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