Lenovo announced yesterday it will set up a new company in China to enable it to better compete against the new breed of low-cost mobile device makers like Xiaomi.
The firm, scheduled to be operational on 1 April, will have a different brand name and aims to market its devices directly to consumers via the internet.
CEO Yang Yuanqing said in August that it would introduce more innovative products after it finalises its $2.91 billion takeover of Google’s Motorola Mobility.
The refocus on China comes as something of a surprise given Yang has previously said Lenovo would “prioritise profitable markets overseas rather than jostle with unidentified unhealthy rivals in China”, Reuters reported. “China is still one of the most important markets for Lenovo, but we actually have more potential opportunity outside of China.”
Lenovo’s international smartphone sales in Q2 represented “nearly 20 per cent” of total shipments, compared with about 5 per cent a year ago.
The technology giant said in August it shipped more smartphones than PCs for the first time ever in the quarter to 30 June, with a record volume of 15.8 million units in Q2, up 39 per cent. The firm reported the same month a 23 per cent jump in profit for its fiscal Q1.
It had a 12 per cent share of the smartphone market in China in Q2 after Xiaomi moved into first place with a 14 per cent share. Lenovo’s share of the global smartphone market was 5.4 per cent in Q2, making it the number four player worldwide, according to IDC.
The company, better known outside of China for its PCs, sells handsets mainly through traditional retailers and mobile operators. It said the new company will use an internet-based business model to market and sell directly to consumers (similar to Xiaomi’s strategy).
It also said the new firm will focus not only on devices, but on software and application development.
Chen Xudong, Lenovo’s president for East Asia, Hong Kong, ASEAN and India, will become CEO of the new company on 1 April.