Lenovo is eager for Europe

Lenovo’s largest Asian computer maker is stepping on the heels of Hewlett-Packard, Acer, Dell and Toshiba. The Chinese are planning the construction of the first factory in Europe, the takeover of European companies, as well as work with end consumers.

“The conquest of the European market has been too complicated for us for a long time,” says Lenovo CEO William Amelio. “Meanwhile, business is growing there.” He is particularly optimistic about the German market, where Lenovo’s share in the short time increased by 5%.

Following the acquisition of the IBM computer division in 2005, Lenovo is “breathing in the back of the head” to its rival Acer. Opponents fight for third place after the leaders in computer production – HP and Dell. The main battlefield is Europe, where Acer’s share is 14.5%, which puts the company in second place after HP. The Taiwanese company strengthened its position in the European market by purchasing Packard Bell and literally taking the largest local producer under the Chinese nose.

“We are again looking for opportunities to acquire other companies, and Europe is a priority region for us,” says Mr. Amelio. Rumors that Lenovo is interested in the manufacturer Fujitsu Siemens, he denied: “Now we are not preparing any deals.”

Despite interest in European companies, Lenovo is betting on organic growth. In the quarter ended, the company sold 23% more computers and, according to IDC, increased its global market share to 8.2%. At the same time, the group’s expenses decreased, and the turnover increased. As a result of such a successful company, the value of its shares tripled this year. In Europe, however, Lenovo’s affairs are still worse than in other parts of the world. In the region of Europe, the Middle East and Africa, turnover grew last quarter by 18%, to $ 886 million, which represents only a fifth of the group’s revenue. To enhance growth, the concern is building the first factory in Europe. It will be located in Poland, and Lenovo plans to produce 2 million computers a year on it.

Expansion beyond the Chinese market is one of the most important strategic goals of the concern. According to Mr. Amelio, the integration of this unit is taking leaps and bounds. Over the past three quarters, Lenovo has grown significantly more than the market. The desktop division is once again profitable by cutting costs. This, however, does not mean the end of the restructuring of the company. The general director of the concern believes that costs should be further reduced.

Another important part of the concern’s strategy is the launch of a business focused on end customers planned for 2008. In this segment, Lenovo is currently only present in China and India. But to start this direction, according to Mr. Amelio, you need to make the brand more recognizable. For this, Lenovo spends significant amounts on sponsorship of Formula 1, the NBA Basketball League and the Beijing Olympics.

Another important point is the concern’s expansion into developing countries. The first was India, where Lenovo’s production is located. Now the concern is eyeing Russia, the countries of Eastern Europe, the Middle East and Brazil. At the same time, the concern does not forget its homeland – China, where it created a computer worth only $ 200, which can be connected to a TV. The main buyers of it were the poor rural residents. “We need to develop ideas that can increase the market,” says Mr. Amelio.

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