Ilse Torres A00225755

Chinas Competitiveness
Myth, Reality, and Lessons for the United States and Japan
Case Study: Lenovo
Lenovo is a personal technology company that serves costumers in
more than 160 countries. It is the largest PC vendor in China and the
second largest in the world. The companys business as a producer of
PCs, mobile Internet devices and mobile phones is built on product
innovation, a high degree of localization and customization in each
country, a highly efficient global supply chain and strong strategic
execution.
It started in Beijing in 1984 as the New Technology Development
Company of the Institute of Computing Technology thanks to the
capital given by the government to impulse the industry. Lenovo soon
merged with a small manufacturing firm,DAW, as a joint-venture
partner and with China Technology as a financial partner. It also
expanded to Hong Kong allowing it to raise capital and overcome its
early inexperience in the global IT industry.
When tariffs on imported PCs into China in 1992 were reduced and
import quotas were eliminated, Lenovo had to become sales and
distributive representatives of American and Japanese computers
companies in China due to its distinct price advantage over Lenovo.
After the integration of China to the WTO Lenovo was put into a much
more competitive environment, so they had to look more to
international markets. Lenovo mad its first appearance globally as a
Olympic sponsor and later when it purchased IBMs ThinkPad PC
business in 2004.
Since the expansion of Lenovo to the global arena and moving its
headquarters to Westchester County, New York, Lenovo has made few
structural changes to IBMs existing PC operations. Lenovos strategies
were conservative, focusing n strengthen the corporate business that
IBMs PC sales relied upon.

Lenovo adopted a protect/attack strategy for 2011-12 that includes

expandind its lead in PC market share in China; continue with the
launch of consumer and commercial tablet computer lines; grow
mobile Internet presence globally; drive convergence with cloud
devices and attractive apps aiming for the best user experience; and
reaching 10% share benchmark in emerging markets key countries.
Lenovos competitiveness indicators include market share, sales,
profitability, research and development. All of them are factors in the
company that can be compared with its competitors to set how well
positioned is the company in the competitive environment of the
industry.
The key advantages Lenovo has going forward are its China market
base, its growth potential in the emerging markets in which it has had
the most experience, the gradual solidification in mature markets, and
its focus on cost innovation. In addition, it has a strong distribution
network, in-house manufacturing specialization, low-cost labor over the
entire company and Chinese government support (as tax advantages,
government grants, the 863 Program, and subsidies).
Lenovo has made numerous partnerships with companies across the
United States and Japan, although most of its competitors are
American and Japanese, this partnerships have allow them to increase
its presence in these countries.
Lenovo as a company has taken advantage of all the opportunities
given: it got support from the government, it exploited an emerging
industry and saw the threads as the intrusion of new competitors in its
market in China as an opportunity to expand its horizons and sell its
products worldwide.
Lenovo learnt to adapt to its costumers and although being
conservative, it changed its methods and management process so they
could compete globally. Lenovo got over the believe that Chinese
products were a synonym of poor quality, demonstrating that its
products were innovative while being economic, and also with a line of
high end products.

As a conclusion, Lenovo is the perfect example of how a company can

grow by learning of the environment and competitors (just as Lenovo
learnt management from HP) and taking the barriers and threads as
challenges and opportunities. Lenovo had its ups and downs, but now a
day it is one of the most important companies in the PC industry.