Len­ovo acts to scale back Brazil unit

Move is part of firm’s effort to re­duce costs amid fall­ing de­mand

China Daily (Canada) - - VIEWS - By MASI masi@chi­nadaily.com.cn

Len­ovo Group Ltd, the world’s largest per­sonal com­puter maker, is scal­ing down its business in Brazil, as part of its broad ef­forts to re­duce costs amid de­clin­ing con­sumer de­mand and in­creas­ing fi­nan­cial pres­sure, Brazil­ian me­dia re­ported.

The Bei­jing-based com­pany has re­duced its work­force in Brazil from 5,000 staff to 800, ac­cord­ing to Brazil­ian news­pa­per Valor. It also re­port­edly has re­lo­cated its man­u­fac­tur­ing plant from a 52,000-square-meter fa­cil­ity in Sao Paulo state to a fa­cil­ity that is half the size.

Len­ovo did not im­me­di­ately re­spond to a request for com­ment.

The re­struc­tur­ing plan came shortly af­ter Len­ovo de­cided to cut up to 1,000 jobs at its Mo­torola unit in Septem­ber, in a bid to turn around its smart­phone business.

Xiang Li­gang, an ex­pert and founder of in­dus­try web­site cc­time.com, said Len­ovo is fac­ing in­creas­ing pres­sure from ri­vals such as Dell Inc and HP Inc in the global arena.

In the third quar­ter of 2016, Len­ovo ac­counted for 21.3 per­cent of the global PC mar­ket, but its ship­ments de­clined 3.2 per­cent year-onyear, while HP and Dell recorded 3.3 per­cent and 6.2 per­cent growth, re­spec­tively, data from In­ter­na­tional Data Corp showed.

When it comes to the Brazil­ian mar­ket, Len­ovo also trails be­hind the two ri­vals in terms of mar­ket share.

“This is a sen­si­ble de­ci­sion, given the re­ces­sion in Brazil,” Xiang added.

But ac­cord­ing to Jacky Zhao, an an­a­lyst at IDC, as the Chi­nese PC mar­ket be­gins re­bound­ing from the bot­tom, Len­ovo will re­gain its edge.

“The firm still has a dom­i­nant po­si­tion in China. Its well-es­tab­lished brand and re­tail­ing chan­nels will give it a boost,” Zhao said.

IDC fore­casts the Chi­nese com­mer­cial PC mar­ket will grow 2.2 per­cent in 2017, putting an end to sev­eral quar­ters of de­cline as lo­cal firms scram­ble to embrace dig­i­tal trans­for­ma­tion.

Len­ovo Chair­man Yang Yuan­qing said ear­lier that the PC unit would con­tinue to be the com­pany’s pil­lar business, and de­mand for PCs won’t de­cline for­ever.

In October, Len­ovo con­firmed it is in dis­cus­sions with Ja­panese tech firm Fu­jitsu Ltd to merge their per­sonal com­puter busi­nesses, in the hope of boost­ing mar­gins through syn­er­gies.

On Tues­day, it launched Phab2 Pro, its first smart­phone to host aug­mented re­al­ity ap­pli­ca­tions in China, and un­veiled a new mid­dleend hand­set to tar­get young con­sumers.

In the quar­ter ended in Septem­ber, Len­ovo saw an 8 per­cent de­cline in revenue.

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