Lenovo gains show China’s tech muscle
- 18th August 2014
- Emerging Markets
Chinese tech giant Lenovo’s profits have shot upwards as the firm eyes further expansion overseas.
Apple might be the best-known name in the computer manufacturing industry, but the price of the Mac range and an abiding preference among many users for different operating systems mean there are a wide range of producers selling lower-cost laptops and PCs.
One of the newer entrants on the scene – at least in the west – is Chinese manufacturer Lenovo, which has risen to become the world’s biggest maker of personal computers. But as its latest results indicate, the company has no intention of resting on its laurels.
Lenovo’s net profit leapt by a dramatic 23 per cent in the three months to June to a total of $214 million (£128 million), while revenue leapt 18 per cent year-on-year to a total of $10.4 billion.
Nearly half of total revenue came from Lenovo’s core business in personal computers, the segment in which its global market share rose by a fifth year-on-year.
What’s really impressive is that Lenovo seems to be gaining at a time when the market as a whole has actually been falling. Laptop sales were 12 per cent higher in the second quarter of the year than the same period in 2013, even though the firm says the whole PC industry saw a 3.7 per cent fall in laptop shipments.
But the company is actually moving away from laptops and focusing more on key growth markets like smartphones and tablets – in fact, it says that for the first time in its history, last quarter saw it sell more smartphones than PCs. Some 15.8 million phones were sold – 39 per cent more than in Q2 last year.
This year Lenovo has already agreed to buy IBM’s server unit and the Motorola phone brand, making the most of popular brands as it invests heavily in mobile tech.
The company is clearly setting its sights not just outside of the PC market, but also much more broadly than its core Chinese market.
In a telephone interview reported by Reuters, chief executive Yang Yuanqing said that although China is still one of the firm’s top markets, “actually we have more potential opportunity outside of China”.
Lenovo is becoming one of the world’s leading tech brands, but it’s also leading China’s rise to become the next technological powerhouse. South Korea may have both Samsung and LG and the US may have Silicon Valley’s finest, but the world’s second largest economy could one day be its top tech producer.
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