Lenovo shoots for the stars in smartphones

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 States-based 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.

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 low- to 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.