LEN­OVO BANK­ING ON UP­MAR­KET PUSH

Firm aims to tighten mo­bile brand­ing and shift fo­cus to pricier mod­els un­der Moto brand

New Straits Times - - Business -

HONG KONG

AF­TER a bruis­ing fall from its spot as the world’s third-largest mo­bile phone maker fol­low­ing its ac­qui­si­tion of Mo­torola three years ago, China’s Len­ovo Group Ltd is count­ing on a push up­mar­ket to stop the bleed­ing in its smart­phone busi­ness.

While the com­pany, which vies with HP as the world’s largest per­sonal com­puter (PC) maker, re­turned to profit in the year to March, losses in its smart­phone busi­ness wors­ened as mar­ket­ing ex­penses for new prod­ucts and key com­po­nent costs in­creased.

The group’s prob­lems started af­ter it ac­quired Mo­torola Mo­bil­ity from Google for US$2.9 bil­lion (RM12.3 bil­lion) in 2014 but strug­gled to in­te­grate the as­sets.

That, com­bined with fierce com­pe­ti­tion from lower-end man­u­fac­tur­ers in its home base of China such as Xiaomi and Oppo, an ed­i­to­rial yes­ter­day.

“The re­sult is a sea of mad­ness.”

The Hong Kong Mone­tary Au­thor­ity (HKMA) has been tight­en­ing rules for lenders, in­clud­ing restrict­ing lev­els of lend­ing to de­vel­op­ers, as it tries to limit fi­nan­cial risks and take some of the heat out of the mar­ket.

The Cen­taline Prop­erty Cen­taCity Lead­ing In­dex of ex­ist­ing homes has ad­vanced 23 per cent saw its global po­si­tion fall to eighth last year.

A re­cently an­nounced re­or­gan­i­sa­tion of its China busi­ness aimed at sharp­en­ing the PC brand’s con­sumer fo­cus comes amid an on­go­ing ef­fort to tighten its mo­bile brand­ing and shift the fo­cus to pricier mod­els un­der its Moto brand.

“Our strat­egy is to pri­ori­tise ma­ture mar­kets ... which need brands and in­no­va­tive prod­ucts, whereas emerg­ing mar­kets need ef­fi­ciency,” said chair­man Yang Yuan­qing of Len­ovo’s mo­bile busi­ness at a press con­fer­ence in Hong Kong on Thurs­day.

“So we will have two teams cater­ing to the two kinds of mar­kets with dif­fer­ent prod­uct lines.”

Len­ovo faces its tough­est bat­tle in its home base of China, where it has slipped out of the top 10 smart­phone ven­dors.

Ship­ments do­mes­ti­cally de­clined 80 per cent year-on-year or 55 per cent quar­ter-on-quar­ter in the first quar­ter of this year, ac­cord­ing to data from Canalys. Reuters in the past year, set­ting new price records week af­ter week.

At a Leg­isla­tive Coun­cil meet­ing yes­ter­day, HKMA chief ex­ec­u­tive Nor­man Chan said lev­els of de­mand were rem­i­nis­cent of 20 years ago — be­fore Hong Kong suf­fered a prop­erty bust — and he ex­pressed con­cern that peo­ple with lim­ited fi­nan­cial re­sources were buy­ing just be­cause they thought prices would only keep go­ing up. Bloomberg

BLOOMBERG PIC

Buy­ers at the first sale day of Ocean Pride, a de­vel­op­ment by Che­ung Kong Hold­ings, in Hong Kong on Fri­day.

BLOOMBERG PIC

Len­ovo faces tough­est bat­tle in China, where it has slipped out of the top 10 smart­phone ven­dors.

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