Lenovo internationalization narrow escape to merger

Lenovo has also transformed, such as before and after the transformation has been questioned, Lenovo's every transformation, accompanied by the test of life and death.

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Wen/Zhang Shule

Published in the April 2016 issue of Business Review, abridged

Nowadays, Lenovo is not the IT association in the past, but a comprehensive enterprise which carries the investment, it, real estate, chemical industry, consumption and many business, a "big association".

Lenovo has been asking for change.

March 18, Lenovo Group chairman and CEO Yang issued an internal letter, announced the restructuring of the four business groups, the restructuring of key organizational structure and leadership, the restructuring of the four major business groups focused on enterprise business, mobile business, VC business and personal computer business.

For Lenovo, this is the third structural adjustment following the 2000 diversification and the massive overseas acquisitions that began in 2006. Through the first two transformations, Lenovo completed the successful transition from a single PC enterprise to a diversified, international brand. But as the transformation was questioned before and after, every transformation of Lenovo was accompanied by the test of life and death.

To complete the diversity of the people who took the burden

"The world trend is to go forward, I myself very much want to let our enterprises live longer, want to do a century-old shop, we decided to do a non-related diversification of the enterprise, the eggs are not placed in a basket." "Leading the first two transformation Lenovo Sinom Liu witnessed the blue giant IBM, the former PC industry boss of the decline, but also finally established that he wants to let Lenovo this domestic PC industry's old-age shop to become a centennial, it is necessary to diversify the determination.

But the diversification of the road is not good to go, even today. For example, in the 2012, the multi-play already skillful Lenovo program to the server market, and 3 years to occupy the Chinese market 20% and the global market 10%. Despite the launch of the server brand-thinkserver and a range of products in June. But within Lenovo, it has to be admitted that Lenovo's research and development prowess is not enough to make up for its short-term board in the near future.

In the early years of Lenovo's diversification, such contradictions were exposed more clearly. How to break the deadlock? Lenovo's antidote is mergers and acquisitions. Or in a more traditional Chinese discourse, it is take doctrine.

Lenovo's $1.25 billion acquisition of IBM's PC business in 2006 became the start of Lenovo's massive mergers and acquisitions and internationalization. Because of mergers and acquisitions, Lenovo's ranking in the PC market has become the world's first; as of 2014, with $2.3 billion in the acquisition of IBM x86 server business, allowing it to win more than 14% of the world's X86 server market share, become the first in the Chinese market and the third place in the world, before Lenovo only a poor 3% In the same year, Lenovo spent $2.9 billion on Motorola Mobility, making it the world's third-largest maker of smart makers.

The instant boom in market share does not mean the success of Lenovo's diversification strategy. IBM, for example, has been its forte in abandoning "shoddy" assets to win funds to attack more promising markets, and Lenovo has become IBM's most sought-after.

Even Mr Liu admits that Lenovo's acquisition of IBM's PC division at the time of the 99% death is likely. And after that, the global PC market shrank and Lenovo, the world's eldest, was the first to regain its vitality after years.

The same was true of the two major mergers and acquisitions in 2014, when Lenovo reported a net loss of $714 million in the second quarter in 2015, making it the first loss in 6 years and a huge loss, and was seen as a result of the takeover of Motorola and IBM servers.

To this, the outside world has a classic teasing: Hundred years old shop has not been made, already middle-aged fat.

Refusing to lean and endure the pains to burn fat

Can eat the support of Lenovo to come over. At the China-US corporate Roundtable held in September 2015, Yang was proud to claim that mergers were easy to integrate, and Lenovo was able to grow from a Chinese company with a turnover of $3 billion a year to a global company with a turnover of $46.3 billion in more than 160 countries by successfully digesting these acquisitions.

Is by no means a sell word can interpret. In response to a question about Lenovo's purchase of Motorola, Yang is confident that buying Motorola's mobile phone business is a good way to fill the gap in Lenovo. To go out, if there is no patent, the product will not be competitive. The small setbacks in the process of integration can be thought of.

The fact is that, after every bite, Lenovo gets the technology, but succeeds in making the pre-merger loss business into a profitable business with many of the advantages of manufacturing and selling in China. The most typical is the PC business, which lost $200 million in IBM's earnings last year, with a profit of more than $1 billion in Lenovo's ten-year operation, completely out of the industry-wide shadow of the PC market downturn, operating as the real head of the industry. It is important to know that former peers, such as Hewlett-Packard, Acer, and Dell, are still struggling with the shadows.

But just by leveraging the geopolitical advantages of the Chinese market, it is still not enough to achieve international success. Lenovo's other Gongfu is to use the acquired high-end technology in the past neglected in the low-end market, to achieve the edge of innovation. Lenovo, for example, has extended IBM's advanced technology, which was used only for commercial computers, to consumption, increasing the share of consumer computers by 10 times times in 10 years.

Similar to the practice of burning fat to generate new muscles, Lenovo has many more. It is fashionable to say that success on the basis of pluralism, the realization of "cross-border robbery." At the same time, Lenovo also in the management structure of the new plan, such as its recently launched Super Product Manager system, the purpose is in more emerging areas, through the form of innovation and entrepreneurship group, to sink into the vertical field, to explore more cross-border possibilities. Of course, relying on Lenovo is now a very strong technical resource inventory.

This is still the law of burning fat, but also Lenovo from the previous generation of "pc+" diversification strategy, the enterprise business, mobile business, venture investment business, the three emerging business and personal computer business is really under the same weight, to find China-made, China created more international vision.

Another round of new pains began, Lenovo's century-old shop dream, perhaps another step.

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Lenovo internationalization narrow escape to merger