Lenovo advances global expansion

Lenovo Group, a Chinese tech company, is rewriting the playbook for global expansion with strategies in supply chain management and international manufacturing amid rising global geopolitical uncertainties.

"Lenovo is a global high-tech manufacturing enterprise, operating a highly intricate supply chain network powered by cutting-edge digital and intelligent technologies," Yang Yuanqing, chairman and CEO of Lenovo Group, told China Daily.

Yang said that with over 30 production bases worldwide and a sprawling network of 2,000 suppliers, the company has established a foothold in foreign markets such as Brazil, Hungary and Mexico.

"These innovations not only enhance our operational resilience globally, but also provide us with a crucial competitive advantage," Yang said.

He said Lenovo adopts a hybrid manufacturing model that combines self-owned factories with partnerships through ODM (original design manufacturer) and OEM (original equipment manufacturer) collaborations, which ensures flexibility and efficiency in its supply chain.

For many Chinese companies, Brazil — with its high logistics costs, complex tax regime and fiercely competitive market — represents a significant challenge.

That said, Lenovo's personal computer market share in Brazil had skyrocketed from 3.56 percent in 2012 to 20.44 percent in 2022, a six-fold increase that now positions the company as the second-largest player in the market.

Motorola, which Lenovo acquired in 2014, has maintained its position as the second-largest smartphone brand in Brazil for nine consecutive years.

Lenovo's infrastructure and solutions business has also made strides, helping it to drive reindustrialization and small and medium-sized growth across Latin America.

Industry experts believe that Lenovo's success in Brazil is rooted in efforts on localization.

The company has invested $40 million annually in its research and development department in Brazil, employed over 1,500 researchers locally, collaborated with 14 research institutions and even operated a 5G laboratory in partnership with a federal university.

To meet local consumer preferences, the Beijing-based company has tailored its product offerings, from embedding digital banking capabilities in Motorola smartphones to introducing smartphones that cater to Brazilian tastes.

Moreover, Lenovo's three factories employ more than 1,600 people, producing PCs, servers and smartphones. The relocation of one of its factories in 2016 enabled it to boost production capacity five-fold, now reaching an annual output of 2.8 million units.

Notably, Lenovo's global growth story extends beyond Brazil. In the second fiscal quarter, the company reported revenues of $17.85 billion, surpassing analyst estimates of $16.33 billion. Net profit also exceeded expectations, reaching $358.5 million.

In terms of the international market, Lenovo's Asia-Pacific market recorded a 35 percent revenue surge, driven by strong sales of Motorola smartphones and high-end PCs in key markets like India and Japan.

Motorola's Edge and Razr series saw triple-digit revenue growth in the Asia-Pacific region. In Europe, the Middle East and Africa, Lenovo achieved a 19 percent year-on-year revenue increase, fueled by growth in smartphones and premium PCs.

According to market research firm IDC, the global PC market was expected to stabilize in 2024, with emerging markets like Brazil, India and Southeast Asia poised for faster recovery.

In Seattle in October, the company introduced the company's innovations and strategies in pursuit of smarter AI for all at its summit that was joined by global tech leaders, including former Intel CEO Patrick Gelsinger and Facebook CEO Mark Zuckerberg.

"This is a time of massive productivity gains on the horizon, a time of fundamental paradigm shifts in our industry, and a time to reimagine the future — for AI to work not only in the cloud, but also at our fingertips, and within our own organizations," Yang from Lenovo said.

Zhou Qiren, a professor of the National School of Development of Peking University, said that intensified global geopolitical tensions have brought new challenges to corporate decision-making.

"Embracing openness, proactively expanding into broader markets and selecting strategic nodes within global market networks have proven to be valuable strategies for many companies," Zhou emphasized.

Zhou said that Lenovo's bold move beyond the domestic market and its extensive global expansion have not only significantly benefitted the company's growth, but also become an integral part of the interconnected global trade and economic landscape.

"This approach has served as a positive counterforce against the headwinds of decoupling and breaking supply chains from some countries," he said.