Lenovo set to increase business with local partners

China's computer maker Lenovo Group Ltd's (聯想) procurement amounts and business exchanges with Taiwanese vendors will increase steadily over the next few years, said a top executive yesterday.

"Our relationship with Taiwanese contract manufacturers and channel partners has deepened over the years," chairman Yang Yuanqing (楊元慶) told reporters in a closed-door briefing yesterday.

According to a Liberty Times reporter who attended the briefing, Yang said Taiwan is a benchmark market for Lenovo, as there are a number of international computer players competing here.

Several Chinese-language newspapers reported that Yang was in town to visit Taiwanese contract manufacturers such as Wistron Corp (緯創), Compal Electronics Inc (仁寶), Quanta Computer Inc (廣達), as well as channel partners like Synnex Technology International Corp (聯強) and Xander International Corp (建達國際).

The reports said Yang's visit indicated Lenovo's intention to cement its relationship with local partners as the company already saw a decline in domestic market share since the merger with IBM Corp's PC unit as well as due to stiff competition from Asustek Computer Inc (華碩電腦) and Acer Inc.

Yang yesterday refused to verify these speculations.

Instead, he said the company is currently moving toward integrating all business aspects of Lenovo and IBM after the transition period to stabilize the workforce and restructure the organization. It may take two to three years to complete this goal, he added.

To expand the company's global visibility, Lenovo will continue to push its product lines via IBM's prominent ThinkPad brand in the near term, while gradually switching to the Lenovo brand, Yang said.

Lenovo fell 4.9 percent to HK$3.40 (US$0.44) in Hong Kong after UBS cut Lenovo to "neutral" from "buy" as the Chinese PC maker's first-half profit came in at the low end of market expectations.

Lenovo on Tuesday a 13.45 percent increase in profit of HK$711 million (US$91.7 million) in the six months to September, compared with HK$627 million a year earlier. Sales jumped to HK$48.11 billion during the half-year period from HK$11.53 billion.

Currently, China contributes 36 percent of Lenovo's revenues, while the US accounts for 32 percent. Europe and the Asia-Pacific region contribute 20 and 12 percent respectively.

Yang Lenovo saw strong growth in emerging markets including China and India, with revenue and volume in both places outpacing the overall PC industry.