Len­ovo shoots for the stars in smart­phones

China Daily (Hong Kong) - - BUSINESS COMPANIES - By SHEN JINGTING shen­jingt­ing@chi­nadaily.com.cn

Chi­nese per­sonal com­puter gi­ant Len­ovo Group Ltd is aim­ing high to be­come a lead­ing player in global smart­phone sales, build­ing up its brand­ing and ex­pand­ing abroad ag­gres­sively. Len­ovo, al­ready the world’s top PC maker, isn’t shy about its tow­er­ing am­bi­tions as it bat­tles for mar­ket share against ri­vals such as South Korea’s Samsung Elec­tron­ics Co Ltd and United States­based Ap­ple Inc. In a new mar­ket­ing cam­paign, the Bei­jing-based com­pany in­vited National Bas­ket­ball As­so­ci­a­tion star Kobe Bryant on stage in the cap­i­tal this month to pro­mote its flag­ship smart­phone prod­ucts.

Len­ovo hopes Bryant will help at­tract mil­lions of youths in China, the group with the strong­est de­mand for the lat­est smart de­vices. Tens of mil­lions of peo­ple play bas­ket­ball in China, and many of them are fans of NBA teams and play­ers.

Liu Jun, se­nior vice-pres­i­dent of Len­ovo Group, is re­spon­si­ble for the com­pany’s mo­bile phone busi­ness. He ex­pects Len­ovo to ship up to 60 mil­lion smart­phones in China this year.

“Len­ovo is the smart­phone brand with the fastest growth rate world­wide,” Liu said at a Bei­jing brief­ing on Sun­day.

Ac­cord­ing to SINO Mar­ket Re­search, Len­ovo has been the sec­ond-largest smart­phone ven­dor in the do­mes­tic mar­ket for 13 con­sec­u­tive months, be­hind only Samsung.

Len­ovo aims to be­come the top smart­phone player in China within two years.

In pre­vi­ous in­ter­views, Chief Ex­ec­u­tive Of­fi­cer Yang Yuan­qing has said Len­ovo needs an­other suc­cess­ful tran­si­tion, since the tra­di­tional PC busi­ness is in struc­tural de­cline. Yang said that smart­phones are Len­ovo’s new op­por­tu­nity.

TOP FOUR SMART­PHONE VEN­DORS IN Q2 2013

An­a­lysts have been taken by sur­prise at Len­ovo’s surge in the smart­phone sec­tor, be­cause it only an­nounced plans to ex­pand in the mo­bile phone sec­tor about three years ago. In 2008, Len­ovo sold its mo­bile busi­ness to “con­cen­trate on the PC sec­tor” but bought it back a year later.

“Len­ovo’s close ties to Chi­nese tele­com op­er­a­tors have been a ma­jor rea­son for its suc­cess in the do­mes­tic mar­ket,” said Li Yanyan, an­a­lyst with Bei­jing-based re­search firm Analysys In­ter­na­tional.

“Through co­op­er­a­tion with car­ri­ers, Len­ovo swept the Chi­nese mar­ket by of­fer­ing a large quan­tity of lowto mid-end smart­phones. Now, the com­pany also wants to ex­plore the high-end smart­phone mar­ket,” she pointed out.

How­ever, Len­ovo has to re­duce its re­liance on the home mar­ket and grow its busi­nesses in­ter­na­tion­ally, said Ni­cole Peng, an an­a­lyst at re­search firm Canalys. “To go global, Len­ovo needs to in­vest in patents and es­tab­lish lo­cal teams and chan­nels.”

Liu said, “We have very ag­gres­sive plans to ex­plore over­seas mar­kets.”

The com­pany has tested the wa­ters in sev­eral emerg­ing coun­tries, in­clud­ing Rus­sia, In­dia and In­done­sia, since last year and the re­sults have been en­cour­ag­ing. In some of those mar­kets, Len­ovo smart­phones gar­nered a 5 per­cent share within three months, ac­cord­ing to the com­pany.

Liu added that Len­ovo will en­ter 30 more emerg­ing coun­tries by year-end. By then, the com­pany will re­al­ize its goal of cov­er­ing 80 per­cent of emerg­ing mar­kets world­wide.

More mean­ing­ful moves are in store for the first half of next year, when Len­ovo plans to in­tro­duce its smart­phones to ma­ture mar­kets such as the US and Europe, Liu dis­closed.

“We hope the over­seas mar­ket will con­trib­ute more than half of Len­ovo’s to­tal smart­phone rev­enue in the long run,” Liu said.

Glob­ally, Len­ovo ranked as the fourth-largest smart­phone ven­dor in the sec­ond quar­ter, ship­ping a record 11.3 mil­lion hand­sets be­hind Samsung, Ap­ple and LG Elec­tron­ics Inc, ac­cord­ing to IDC.

Chi­nese firms on move

China has sur­passed the US to be­come the world’s big­gest smart­phone mar­ket. Ac­cord­ing to Canalys, smart­phone ship­ment in China reached 88 mil­lion in the sec­ond quar­ter, ac­count­ing for one-third of all ship­ments world­wide.

Boast­ing a huge smart­phone mar­ket vol­ume, to­gether with the largest mo­bile pop­u­la­tion, China will nat­u­rally be­come a hot­bed of mo­bile phone in­no­va­tion and pro­duc­tion.

Al­though they’re not house­hold names such as Samsung and Ap­ple, many Chi­nese hand­set mak­ers have suc­cess­fully made their way into the top 10 glob­ally, thanks to high-vol­ume ship­ments of low- to mid-end mo­bile phones.

Shen­zhen-based Huawei Tech­nolo­gies Co Ltd and ZTE Corp, tra­di­tion­ally known as tele­com equip­ment gi­ants that com­pete with ri­vals such as Swe­den-based Eric­s­son, now hope to found smart­phone em­pires.

Huawei’s and ZTE’s over­seas ex­pan­sion into the mo­bile phone busi­ness came much ear­lier than that of Len­ovo.

By build­ing tele­com net­works for car­ri­ers world­wide, Huawei and ZTE formed good re­la­tion­ships with lo­cal op­er­a­tors and man­aged to make in­roads in many mar­kets by us­ing those op­er­a­tors’ dis­tri­bu­tion net­works. Now, Huawei and ZTE mo­bile phones are a com­mon sight in many emerg­ing coun­tries in Africa and South­east Asia.

Those two Chi­nese com­pa­nies have al­ready ex­tended their reach to more ma­ture and prof­itable mar­kets, such as North Amer­ica and Europe.

ZTE es­tab­lished a North Amer­i­can busi­ness group ear­lier this year, which will re­port di­rectly to its core man­age­ment.

ZTE was the fourth-largest mo­bile phone ven­dor in the US by ship­ments in the sec­ond quar­ter, with a mar­ket share of 6.2 per­cent, be­hind Samsung, Ap­ple and LG, ac­cord­ing to re­search firm ITG.

All of the ma­jor US tele­com car­ri­ers, in­clud­ing Ver­i­zon Com­mu­ni­ca­tions Inc, AT&T Inc and T-Mo­bile In­ter­na­tional AG, have co­op­er­ated with ZTE in sell­ing its hand­sets, said He Shiyou, ex­ec­u­tive vice-pres­i­dent of ZTE.

It wasn’t easy to reach that stage, He said, not­ing that ZTE didn’t even crack the top 10 in the US mo­bile phone sup­plier mar­ket two years ago.

Huawei ex­pects to ship 60 mil­lion smart­phones world­wide this year, which would be al­most dou­ble last year’s 32 mil­lion units.

Al­though Huawei has faced hur­dles in its tele­com equip­ment busi­ness in the US be­cause of national se­cu­rity con­cerns there, Richard Yu, chair­man of Huawei Con­sumer Busi­ness Group, said Huawei is still com­mit­ted to the US smart­phone mar­ket.

“As time goes by, more con­sumers will trust Huawei,” Yu said in a tele­vi­sion in­ter­view.

WANG JING / CHINA DAILY

In a new mar­ket­ing cam­paign, Len­ovo Group Ltd in­vited National Bas­ket­ball As­so­ci­a­tion star Kobe Bryant to Bei­jing this month to pro­mote its flag­ship smart­phone prod­ucts.

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