Lenovo Group Chairman Yang Yuanqing wants to challenge perceptions of Chinese companies as mainly producers of cheap, low-end products.
To do this, Lenovo is pushing high-end models, like the the ultra-thin X300and feature-packed IdeaPad, in international markets to showcase its technological prowess. As a result, Lenovo has yet to roll out a range of low-end products outside China.
For now, this strategy means Lenovo is missing out on the low-end segment of the international PC market, where higher shipment volumes can offset lower system prices. But Yang isn’t worried, promising that once Lenovo establishes itself as a provider of high-end and mid-range computers it will expand into low-end product segments.
Yang recently sat down with CDNNow to discuss the company’s continuing efforts to grow its business outside China. The following is an edited transcript of that interview.
CDNNow: The X300 and IdeaPad are high-end products. Does Lenovo have plans to target the low end of the PC market outside China?
Yang Yuanqing: I think the X300 is a pretty innovative product. It proves we have the spirit of innovation. This is how we want to position ourselves. We don’t want the public to see Lenovo as a company that provides cheap, low-end products. We want people to identify Lenovo as an innovative company.
CDNNOW: By focusing on the high-end and mid-range markets, are you missing the opportunity to ship higher volumes of low-end systems?
Yang: We want Lenovo to be a company that can provide a full range of products, from top to bottom. But we should have different strategies in different markets. Outside of China, because our market share is still very low, we need to choose the right product segment to start. In China, where our market share is very high, we can cover a wide range of segments, from top to bottom.
CDNNOW: How long will it take to expand the product line outside China, and push into those low-end product segments?
Yang: Until we have seen the success of the first step. We should start with mainstream and premium products, after we succeed in those areas we can consider other segments.
CDNNOW: Will that happen quickly?
Yang: I hope so.
CDNNOW: There’s an increasing amount of talk about low-cost laptops, fueled by the success of Asustek Computer’s Eee PC. Will Lenovo work with Intel to roll out a low-cost laptop based on the upcoming Atom processor, either in China or elsewhere?
Yang: As a first step, we should cooperate in China. After we see success in China, and outside China we have seen success in the high-end and mainstream segments, then we should consider the low-end products outside China.
Even if we can succeed in low-end products outside China, that’s not really going to bring long-term success. People will see Lenovo as a low-end company. This concern is especially important for a brand from China. We must change the preconception some people have that China can only produce low-cost products. That’s difficult, but we have to change those assumptions.
CDNNOW: IDC now puts Acer ahead of Lenovo in terms of global PC market share. How important is it for Lenovo to take back that No. 3 spot?
Yang: The ranking is just the natural result of how a company performs, so you shouldn’t set that kind of target. I ask my team to focus on our core competencies and to grow faster than the industry’s average growth. If you can always grow faster than average growth, then absolutely you will gain market share. That means step by step your ranking will be raised.
I have never set a ranking target for our team. We have to focus more on building our core competencies first, rather than just faster growth. That’s more important, that’s sustainable growth.
CDNNOW: Lenovo came close to acquiring Packard-Bell, but that deal fell through. Is Lenovo looking for other acquisitions?
Yang: Acquisitions are an opportunity for us to grow. Also, we have a lot of experience with this kind of growth. That’s become another one of our core competencies, to integrate new businesses and different cultures. Absolutely, we should leverage that advantage to give our shareholders a better return, but it has to be a good opportunity. If there’s an opportunity there, we would take it.
CDNNOW: Do you see any good acquisition opportunities right now?
Yang: No.
