On Wednesday, Chinese PC maker Lenovo announced a strategic partnership with Alat, a subsidiary under Saudi Arabia’s Public Investment Fund (PIF) focused on transformative technology investments and sustainable manufacturing, with Alat proposing a $2 billion zero coupon convertible bonds investment in Lenovo. 

Lenovo will establish its Middle East and Africa (MEA) regional headquarters in Riyadh, the capital of Saudi Arabia, which will include a customer center and R&D center for the region. The company will also build a new manufacturing base for personal computers and servers in Saudi Arabia.

Why it matters: As a wholly-owned subsidiary of PIF, Alat aims to leverage this collaboration to drive industrial transformation in Saudi Arabia, positioning the country as a world-class hub for sustainable technology manufacturing. Lenovo will look to increase its presence in the MEA region via the partnership.

Details: Lenovo will issue $2 billion in convertible bonds to Alat, using the proceeds to repay debts and for corporate purposes, according to the announcement. 

• The bonds mature in three years and can be converted to equity at HK$10.42 ($1.33) per share, a 10% premium over the 30-day average VWAP (Volume Weighted Average Price). Issuance is contingent on Lenovo shareholder and regulatory approvals. Currently, Lenovo has approved a proposal to issue 1,150,000,000 warrants at a price of HK$1.43 ($0.18) per warrant, according to the statement.
• PIF, a sovereign wealth fund, manages assets exceeding $700 billion, according to Lenovo. The agreement between the two parties stated that Alat will have the authority to nominate a non-executive director candidate to join Lenovo Group’s board of directors through the customary director appointment procedures of Hong Kong.
• “Through this powerful strategic collaboration, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in the MEA region,” said Lenovo CEO Yuanqing Yang.
• “As Lenovo establishes its regional headquarters in Riyadh and a clean energy manufacturing base in Saudi Arabia, we expect its growth to accelerate in the MEA region,” said Alat CEO Amit Midha.

Context: In the first quarter, global PC shipments increased around 3% year-on-year to reach 57.1 million units after eight consecutive quarters of decline, according to market research firm Counterpoint Research. Lenovo secured the leading position in the global market with a 24% share, reaching 13.7 million units, up by 8% year-on-year.

• The market intelligence firm IDC predicts that the IT and business services market in the MEA region is expected to reach nearly $38 billion in 2027, driven by the continuous increase in large-scale projects and rapid economic development in the region.

Lenovo and Xiaomi may be in for a legal dispute after the head of the personal computer giant’s smartphone business jumped ship to the smartphone maker on Thursday.

Why it matters: The move followed a leadership reshuffle at the world’s fourth-largest smartphone maker in late November in which the roles of as many as eight high-ranking executives were affected. Xiaomi ceded significant share in the domestic smartphone market to rivals last year, falling to 9% in the third quarter from 12% in Q2, according to market research firm Canalys.

• Chang Cheng, former head of Lenovo’s smartphone unit, announced his departure from Lenovo on Dec. 31. He has more than 3 million followers on China’s social media platform Weibo and has openly criticized Xiaomi’s smartphone offerings, including a comment in March on founder Lei Jun’s Weibo post about the low-end Redmi Note 5 in which Chang called the phone a “bucket” in reference to its thickness.
• Chang’s departure is seen as a blow to Lenovo’s underperforming smartphone business. Revenue for the company’s smartphone division dropped 7% year on year in the quarter ended Sep. 30.

Details: Lenovo said it would take legal action on Thursday, the day Chang announced he had joined Xiaomi.

• The personal computer manufacturer said it has signed non-compete clauses with all of its executives and that it would seek to resolve disputes “within the legal framework” should there be any breaches, according to Chinese business media Yicai, citing a Lenovo spokesperson.
• The Yicai report cited a source close to Xiaomi as saying that Chang left Lenovo without signing a non-compete clause and he was not paid any related compensation.
• Xiaomi declined to comment when contacted by TechNode on Friday. Lenovo did not immediately respond to requests for comment.

Context: Chang joined Lenovo in 2000 as a research and development director at Lenovo’s laptop business unit.

• He became the CEO of ZUK, a smartphone spin-off, in June 2015, and was appointed a Lenovo senior vice president.
• Lenovo’s smartphone business has struggled to gain traction in recent years, even after it bought US-based handset brand Motorola from Google in 2014 for $2.9 billion. Its market share in China has remained less than 1% since 2017.

Liu Chuanzhi, the founder of Chinese computer giant Lenovo Group, will announce his retirement and step down as the chairman of Lenovo parent company, Legend Holdings, on Wednesday, according to Chinese media reports.

Why it matters: The 75-year-old entrepreneur is widely regarded as the godfather of China’s emerging powerhouse economy and his founding of Lenovo three decades ago still ranks as one of the biggest technology success stories in China.

• Liu guided Lenovo’s transformation more than 30 years ago from a computer importer to China’s first multinational company and the world’s largest personal computer seller.

Details: Legend Holdings will issue a public notice announcing Liu’s retirement after the Hong Kong stock exchange closes on Wednesday afternoon, Shanghai-based media outlet the Paper reported on Monday, citing anonymous sources.

• The management role for Legend Holdings will be handed over to a team led by current senior vice president and chief financial officer Ning Wen.
• Legend Holdings president, 57-year-old Zhu Linan, will also announce his resignation on Wednesday, according to the report.
• Legend Holdings could not be reached for comment. A Lenovo representative declined to comment when contacted by TechNode on Tuesday.

Context: Founded in 1984, Lenovo’s businesses range from producing personal computers, smartphones, and servers, to information technology (IT) management software and electronic storage devices.

• Legend Holdings is a Beijing-based investment holding company and Lenovo’s controlling shareholder. The company went public in Hong Kong in June 2015.
• Lenovo acquired IBM’s personal computing business for $1.8 billion in 2005, a deal that many people hail as a turning point for China’s technology sector.
• In 2014, Lenovo bought US-based handset brand Motorola from Google for $2.9 billion in a bid to accelerate its fledgling smartphone business.

Lenovo’s net profit more than doubled in the first fiscal quarter to beat analysts’ estimates, although the world’s largest PC maker warned that uncertainty lies ahead due to trade frictions between the US and China.

Why it matters: Lenovo’s business performance could suffer going forward due to President Trump’s threats of new tariffs on Chinese goods.

• Trump said on August 1 that he would introduce a 10% tariff on $300 billion of Chinese imports, including tablets, as well as laptops and desktop computers, after recent talks with China failed to deliver a trade deal.
• He added last week that tariffs on some goods including tablets and laptops would not come in until December, but those for desktops would start in September.

“There is a complexity of macro risks arising from ongoing trade negotiations, import tariff changes implemented by countries and challenges alongside geopolitical uncertainties.”

—Lenovo’s earnings statement for the first fiscal quarter for 2019-2020

Details: Net profit at Lenovo surged 111% to $162 million in the first fiscal quarter, beating analysts’ average estimate of $154 million, while revenue rose 5% to $12.5 billion.

• Revenue from its personal computer businesses grew 12% to $9.6 billion, while smartphone sales dropped 9% in the quarter.
• The company secured a record 25.1% share of the global PC market in the quarter, Lenovo cited industry data as saying.
• The global PC market grew 1.5% in the second quarter after two quarters of decline, according to market research firm Gartner.
• Its data center division saw a 17% decline in revenue, which the company attributed to sluggish demand in the industry.

HP, Dell and Microsoft join electronics exodus from China – Nikkei Asian Review

What happened: A new set of companies which produce notebooks, game consoles, e-readers, home assistants, and smart speakers plan to join the exodus from China, Nikkei Asian Review reported citing anonymous sources. Microsoft, HP, Dell, Sony, Nintendo, Google, and Amazon think the renewed promises of reconciliation coming from last week’s G20 meeting are too uncertain, the report said. Lenovo and Asustek are also considering similar moves. Meanwhile rising labor costs in China have already lowered production demand and will continue to do so. Companies are eyeing Southeast Asia as an alternative.

Why it’s important: Leaders from the US and China made an effort to appear reconciliatory at the G20 meeting. But observers have said no solid details have been announced, while there are many issues left to be resolved for a trade deal. The US-imposed hiked tariffs on Chinese exports have landed a severe blow to China’s position as a tech powerhouse. Apple and China’s largest private sector employer Foxconn have already announced plans to move more than 30% of production out of China. Meanwhile, other American companies are fighting to maintain access to the Chinese market.

Chinese PC maker Lenovo on Sunday maintained that it would continue normal business relations with Huawei, after the US President Donald Trump issued an executive order last week to cut the telecommunications company off from American suppliers.

Rumors about Lenovo ending business ties with Huawei circulated widely on Chinese social media over the weekend. A netizen using the handle “Huiji” on the Chinese Q&A platform Zhihu said the PC maker caved to US pressure to avoid joining its fellow compatriot on a US blacklist. Another Zhihu user posted similar answers citing internal sources.

The two later apologized and deleted the posts after Lenovo threatened legal action. The world’s largest PC maker said in a WeChat announcement that Huawei was an “important client” and that it is maintaining normal relations with the Shenzhen company.

It also promised to continue supplying Huawei with products and services, with the caveat that it will strictly abide by the laws and regulations of the countries and regions where it does business. Some netizens commented that the suspension will come “sooner or later as the law is now clear” (our translation). Lenovo declined to comment when contacted by TechNode on Monday.

Lenovo has headquarters in Beijing and Raleigh, North Carolina, and has faced questions about its patriotism on the Chinese internet since a statement from its CEO, Yang Yuanqing, to global media in late 2018. Yang said that Lenovo was not a Chinese company, but a global company with a worldwide footprint. This sparked strong criticism in China, according to local media reports.

Netizens have accused the company of having pro-American views and discriminating against Chinese consumers over the issue of 11 global product recalls excluding China. Lenovo responded in a WeChat post earlier this month that it had no quality problems in some of the products, adding that the truth had been twisted, denigrating the company.

The rumors of Lenovo’s suspension followed shortly after Google reportedly ended some of its business with Huawei. According to Bloomberg reports on Monday, US tech giants including Intel and Qualcomm have joined Google in suspending business ties with Huawei to comply with Trump’s ban.

PC maker Lenovo returns to profit in third-quarter on strong performance across business groups – Reuters

What happened: Chinese PC maker Lenovo on Thursday reported a profit of $233 million in the last three months of 2018, compared to a loss of $289 million in the same period a year earlier. The company’s revenue rose 8.5% to more than $14 billion, the highest in four years. Its mobile phone business turned to profit for the first time since it purchased Motorola in 2014.

Why it’s important: Lenovo’s net profit owes much to its Intelligent Devices Group, also known as IDG, which operates the firm’s PC, smart devices, and mobile phone businesses. Its PC sales witnessed year-on-year growth of 16%, with a global market share of almost 25%. In terms of international performance, Lenovo secured second place in Latin America despite currency volatility and supply shortage. Headquartered in Beijing and North Carolina, the company said it was “well prepared for geographic political and macroeconomic instability” with its worldwide manufacturing capabilities.

Taiwan preps China blacklist banning Huawei and ZTE – Nikkei Asian Review

What happened: Taiwan is preparing to bar government agencies and state-controlled companies from using equipment from Chinese tech companies on a new blacklist, which it plans to publish by the end of March. Companies including telecom equipment manufacturers Huawei and ZTE, surveillance camera makers Hikvision Digital Technology and Dahua Technology, and computer manufacturer Lenovo are likely to be put on the list.

Why it’s important: While Taiwan has blocked its wireless carriers and government agencies from using equipment from Huawei and ZTE since 2013, this is the first time the government has created a list targeting a wide range of Chinese tech companies that might pose security risks. Taiwan’s move against Huawei and other Chinese tech giants comes as countries like US, Australia, New Zealand, and the UK become increasingly wary of products from vendors in China. It also comes amid rising political tension between the self-ruled island and China.

Electronics firm Lenovo China will restructure its businesses to become more customer-centric. The move follows a slew of recent reorganization announcements by Chinese tech companies including Baidu and TCL.

According to an internal email written by Lenovo China President Liu Jun, the company will reorganize to focus on three areas: commercial customers, small- and medium-sized enterprises, and consumers. Liu, who is also executive vice president for Lenovo, said the company’s China division had seen marked growth over the last year. A Lenovo representative confirmed the authenticity of the email to TechNode

Last May, company CEO Yang Yuanqing told reporters that Lenovo’s phone business “has sunk to the bottom.” Earlier in the month, the company had also been removed from Hong Kong’s Hang Seng Index after a steep drop in value. But by late September, Lenovo’s shares had risen 42% again, outperforming all other Chinese tech stocks.

Liu wrote in the letter that Lenovo had made significant progress in marketing, customer relations, services, and other areas, while also exploring and laying out alternatives outside of its core PC business.

Its consumer branch will integrate smartphone product marketing, sales, and promotion. According to Liu, the company’s formerly underperforming phone business has seen significant growth in the last three quarters and pushed out multiple products. According to the company’s second-quarter results, its Motorola brand broke even globally for the first time in 2018.

A number of Chinese tech firms have moved to concentrate on enterprises amid a slowing economy. Baidu, Tencent, and Alibaba all recently announced plans that are aimed at increasing their cloud computing abilities, while TCL sold its stake in nine consumer-facing businesses to instead work on panels and semiconductors.

Last May, in the midst of its financial troubles Lenovo China underwent restructuring to serve a renewed focus on consumers. The change overhauled the Chinese unit into a PC and smart-device group and a data center division.

Lenovo has launched its first-ever AI-powered cashier-less store, the Lecoo Unmanned Store, in Beijing after four months of pilot operation, our sister site TechNode Chinese is reporting.

After a quick registration through WeChat, users can enter the store through facial recognition. No smartphone operations will be needed at the cashier because the charges will be deducted from their accounts automatically. The 80-square meter unmanned convenience store sells daily groceries including juice boxes and other small snacks. The good damage rate is controlled at around 1% during the pilot period, lower than regular retail stores and supermarkets, Lenovo explained.

Best known for making computers, phones, and smart home devices, Lenovo is trying to catch up with China’s burgeoning new retail trend. The company rolled out its first offline smart gadget store at the beginning of this year and plans to launch 5,000 smart automated sales machines in the future five years.

The revenue of Lenovo’s new retail and internet-of-things unit Lecoo is expected to hit RMB 1 billion ($144 million) in the future two years and $1 billion by 2020, according to Zhou Ming, CEO of Lecoo.

Largely inspired by Amazon Go, the staffless store boom started in China in mid-2017 when a host of startups like BingoBox, Xingbianli, and Bianlifeng emerged. Although most of the staffless stores still need users to scan each item at the checkout point and pay with Alipay or WeChat Pay by scanning QR codes, it was fascinating enough to attract lots media coverage as well as funding.

Although the heat surrounding unmanned stores has cooled off as competition tightened, tech giants still find it a promising sector to focus on, especially as the technology matures with the support of AI. Lenovo is the latest entrant to the cashier-less convenience store frenzy, following Alibaba, JD, Suning.com, and Amazon.

World’s Worst Tech Stock Becomes China’s Hottest in Five Months —Bloomberg

What happened: Lenovo’s shares rose 42 percent since June when the company’s stock was dropped from Hong Kong’s benchmark stock gauge Hang Seng. Since 2013 when Lenovo was added to Hang Seng until its removal, the company’s stocks plunged 57 percent losing $5.9 billion in value. Today, Lenovo is outperforming every other Chinese tech stock.

Why it’s important: The miraculous rise shows that Lenovo is doing something right with its PCs and laptops. Recently, the company admitted that its smartphone business has sunk to the bottom despite acquiring Motorola. However, the rise also reflects the slowdown of other Chinese tech stocks including Tencent and companies hit by the US-China trade war. Lenovo has been trying to avoid the stigma of Chinese companies which Huawei and ZTE are facing by describing itself as a global company. This, however, did attract some scrutiny in China.

Chinese multinational Lenovo has issued a statement saying that CEO Yang Yuanqing’s interview with UK-based technology website The Inquirer, in which he was quoted as saying that Lenovo is not a Chinese company, was misinterpreted.

“Lenovo is a global company,” Yang told The Inquirer. “We’re not a Chinese company,” he said, adding that the company has a global footprint. The article aimed to investigate how the company was able to stay out of the spotlight, despite other Chinese companies being censured abroad.

However, the company says its CEO’s words were misconstrued, and further confusion was created by adding to the quote to the headline of the article. It claims that he said the company is not only a Chinese company but also a global firm, as it has R&D and manufacturing bases in numerous countries around the world.

Yang took to Weibo to express his views, saying he didn’t expect his interview with a foreign media outlet to cause such a reaction. “My dream has always been for Lenovo to be not only a successful Chinese company but also a global company with inclusiveness,” he continued.

Chinese tech companies including ZTE and Huawei have a rough time in recent months. Regulators and lawmakers have moved to limit the companies’ businesses in the US and Australia, citing national security concerns. Additionally, ZTE was banned from sourcing components from American manufacturers after it was found to have violated US sanctions on Iran and North Korea. It eventually paid $1.4 billion in penalties and agreed to impose radical changes in upper management to have the ban lifted.

Additionally, both ZTE and Huawei have been banned from conducting 5G trials in India.

However, Lenovo has also seen its share of suspicion. In 2014, US security officials weighed in on its purchase of IBM’s x86 server business, saying that it could weaken national security. This wasn’t the first time officials had concerns about an IBM-Lenovo deal. In 2005, IBM sold its PC business to the Chinese tech giant, which raised concerns that the company’s laptops were “connecting to China.”

“Lenovo phone business in China has sunk to the bottom, and thus we have no fear anymore” Yang Yuanqing, CEO of Lenovo, said to a Chinese reporter on May 24 (our translation). “But, we’re far from giving up. This is part of the strategy.”

In 2017, Lenovo Group’s revenue hit $45.4 billion, a 5.38% YoY increase. However, it’s mobile business revenue was $7.2 billion, a 16% decrease year-over-year.

Lenovo’s unsatisfactory phone business is not new news. The company acquired Motorola—a former tradition communication device giant—but found it hard to improve market performance.

According to data quoted by China’s mouthpiece Xinhuanet.com, in 2017, Lenovo sold 49.7 million smartphones worldwide. Among them, only 1.79 million smartphones were purchased by domestic consumers (in Chinese). During the first quarter of 2017, Xiaomi alone shipped 8.9 million smartphones in China. Huawei, in the same year, shipped over 153 million smartphones globally.

“We have voluntarily withdrawn from around 70 to 80 countries – mainly small countries. [But] we have similar thought on big markets, which is: we want to profit in every market [we choose to enter],” Yang said. “The Chinese market is the only one in the world that holds increasing rich investment. And because of this, players can survive even while losing money.” Yang added, “The Chinese market is too important, too big. Though we’re in a loss, we will increase investment.”

But Yang’s words are not simply marketing cliché. Firstly, Lenovo’s core business is not smartphones. The company’s profit and strength lie in PC and laptop unit. According to Lenovo, their PC business has overtaken HP as the new world number one. Meanwhile, Yang’s thoughts on China’s business context are not wrong. To secure the market and attract new partners, material sacrifice is part of the game.

The timing of when people shift attention to Lenovo is also interesting. Between high-end Apple and Samsung and middle-to-low-end Huawei, Vivo, Xiaomi, and now OnePlus, Lenovo’s phone has never been in an easy situation. If the weak phone performance is not new, why is the news now so hot?

Chinese media reported the company had an “unpatriotic 5G standards vote” during a meeting held in the US in 2016. Liu Chuanzhi, the founder of Lenovo and a man whom entrepreneurs in China call “Godfather”, responding to overwhelming criticism, said the unpatriotic charge was part of a broader conspiracy.

Though financial numbers have no connection with nationalism or patriotism, Lenovo has to face intensifying market attention directly.

The founder of Lenovo, Liu Chuanzhi, has released a heartfelt public statement to put across his side of the story amid an increasingly tense public backlash against the Chinese computer manufacturer. The coming to light of Lenovo voting at a 5G standards setting meeting in 2016 for a technology led by US firm Qualcomm when a Huawei alternative was available, has triggered heated questioning of the firm’s allegiances. The vote in question was only for part of one standard and became viral after being posted on Chinese Q&A platform Zhihu on May 9.

Tech and voting

The world of 5G standard setting is highly complex. Here we attempt to explain what happened as context to the subsequent public reaction.

In the second half of 2016, the body that decides global standards for mobile data, the 3rd Generation Partnership Project (3GPP), held three meetings which included agreeing on a particular standard, the Enhanced Mobile Broadband coding scheme. This comes in two parts—the data channel and the control channel. At the first meeting, three technologies were proposed: LDPC led by Qualcomm, Huawei’s Polar Code and Turbo led by LG/NEC. 

At the second meeting the technologies were regrouped into LDPC, Polar, LDPC+Polar, and Turbo+LDPC. The first round of voting was held, for the data channel. Only Huawei itself voted for the pure Polar option. Lenovo voted for the pure LDPC solution. Most Chinese manufacturers were in favor of LDPC+Polar. LDPC won.

In the third meeting, in November 2016, a vote was held for the coding channel. Lenovo chose Huawei’s Polar Code, which won the vote.

Lenovo letter

The voting details, which appear to have been publicly available since the event, caught hold online in China from May 9 and on May 16 Lenovo’s founder Liu Chuanzhi published on Lenovo’s WeChat channel a joint public statement (in Chinese) alongside Lenovo Group Chairman and CEO Yang Yuanqing and Lenovo Holdings Chairman Zhu Linan.

Liu seems puzzled at the reaction (in Chinese) and attempts to reassure readers of Lenovo’s commitment to China, building to a corporate-Communist battle cry. He explains the voting procedure:

“In the second round of voting (RAN1#87), we comprehensively took into account the country’s overall industrial cooperation, innovation, and development, and resolutely chose the Polar Code solution, for which previously Lenovo had built up very little technical support. I personally think that Lenovo’s voting principle has been without problem throughout the whole process, and there is no problem in implementing it!”

Liu says he has spoken to Huawei founder Ren Zhengfei who confirmed he had no issues with Lenovo and thanked the country for its support. “We both agree that Chinese companies should be united and must not be provoked by outsiders,” writes Liu.

He lists the company’s travails over the past 30 years before stating zero tolerance for any questioning of the loyalty of the “national brand” (民族品牌). The letter ends with call on all employees to unite to win the battle for Lenovo’s honour.

Why now?

China’s input into the setting of global standards for 5G technologies has become more highly charged after the US bans on the use of Chinese telecoms equipment and the recent export ban on components to ZTE. This move is being seen by some as a deliberate move to derail China’s 5G progress.

The adoption of Chinese tech and protocols would put its companies and the country in general in a beneficial position. Setting standards is also seen as a matter of pride as China has been playing catch up with various technologies and has previously followed rather than established standards.

In the second half 2017, Chinese laptop maker Lenovo showed 20.2% market share, a year-on-year drop of 4.9%, while the market leader HP showed considerable growth, driving the overall performance of notebook shipments beyond previous expectation, market research firm TrendForce is reporting. 

For 2018, the market share of the top six brands is expected to rise to 89.1%, squeezing the room for other brands to develop. On the other hand, Xiaomi and Huawei recorded growth in Chinese market, but the results of their overseas deployment are not clear yet. Xiaomi’s laptop Mi Air was launched in July 2016, with a bold design, not revealing its logo on the laptop cover.

Two weeks ago, Chinese company Lenovo voluntarily recalled about 80,000 ThinkPad X1 Carbon 5th Generation laptops due to a potential fire hazard last week. Officials said about 78,000 ThinkPad X1 Carbon Laptops were included in the United States, as well as about 5,500 in Canada, according to Fox. These 12-inch touchpad computers feature detachable keyboards for tablet functionality and even come with Active Pen styluses.

Taiwanese multinational electronics company ASUS’s market share dropped to 9.5%, ranking the fifth. ASUS has adjusted its product strategy in recent years and shrink the production of models with low profits.

Acer continues to expand aggressively in the Chromebook market, and its notebook shipments growth in North American market raised its annual shipments by 0.6%. Its market share recorded 8%.

Apple and HP recorded double-digit growth in 2017. HP has demonstrated its ambition since the second quarter and recorded new highs of shipments in 2H17. With a market share of 24.3%, HP has retained first place in the shipment ranking.

The updated MacBook Pro in Q2 2018 helped Apple expand shipments by 18% for the whole year, the highest growth rate among all the notebook brands.

India’s market has become another battlefield for China’s mobile phone manufacturers. The second largest market after China showed 36 million units of smartphone sales, a 7% increase YoY. Four of China’s companies are putting greater pressure on Samsung, according to an Indian smartphone market third-quarter report released by Yonhap news agency on Sunday.

The report shows that Samsung mobile phone is still veteran in India market taking the first place, with a third-quarter share of 26%. Chinese player Xiaomi ranked second with its share increasing to 25%. In the second quarter of this year, Samsung had a market share of 21.2%, while Xiaomi recorded only 15.6%.

Three other Chinese companies monopolized the other positions in the top five. Vivo had 10%, OPPO 9%, while Lenovo’s market share fell to 7%.

“As China’s market saturates, the fast-growing India market will become a much more important market for smartphone manufacturers next year,” the report said. The Indian market is growing fast in both consumption and retail sector, as India’s retail sector surpassed China with anticipated growth of $1.3 trillion by 2020.

Statistics show that the most popular smartphone prices between $100 to $150 in the Indian market. Chinese manufacturers have launched a large number of products within this price range, cultivating Indian fans.

Replicating the pattern in the Chinese market, Chinese mobile phone manufacturers in India have had great success, as they launched high quality Android mobile phones, which have the same configuration with that of iPhone, but with a much lower price tag.

The Red Mi Note, Red Mi 4, Red Mi 4A were the three most popular mobile phones from Xiaomi (in Korean) in India, and Samsung’s low-end mobile phone Galaxy J2 ranked fourth.

Huawei may have beat Apple in global mobile phone sales since June, becoming the world’s second-largest smartphone brand, next only to Samsung. However, Huawei failed to enter the top 5 in India.

Xiaomi, Oppo, Vivo, and Lenovo are among the top five mobile brands in India, but Samsung continues to rule India’s smartphone shipments with a 25 percent market share, according to new figures from market research company Canalys.

“With China suffering its own decline this quarter, India is a market of huge strategic importance to Chinese smartphone vendors,” said Canalys Research Analyst Ishan Dutt. “Samsung is under immense pressure in the mid-tier from the Chinese players.”

Over 50 percent of India’s smartphone brands is currently controlled by Chinese brands, including Xiaomi, Oppo, Vivo, Shenzhen-based Gionee, and Lenovo.

The biggest winner of this year’s Q2 is Xiaomi which has more than quadrupled its shipments to 4.8 million units making it India’s largest smartphone brand after Samsung. This month, Xiaomi celebrated its third Mi anniversary in India. Sales of Xiaomi’s Redmi series have been growing strong despite a viral video showing one of Xiaomi’s phones catching fire. The incident, however, seems to be fake.

Thanks to its popularity among tier-two and tier-three cities, Vivo placed third in this quarter shipping a record 3.4 million units. Unfortunately, the company’s reputation came under scrutiny after a protest from former workers turned violent on Tuesday. According to media reports, as a part of its efforts to boost its brand by sponsoring the Indian Premier League Vivo hired a number of workers during the season and has now begun laying them off. In the case of Tuesday’s protests, the workers were fired with no prior notice.

Oppo, which is like Vivo owned by Guangzhou-based BBK Electronics, came fourth, closely followed by Lenovo with 1.9 million units shipped in the second quarter.

One brand that was notably missing from the report is Huawei which is lagging behind its compatriots in conquering the Indian market. Huawei sold only 1 million units during the last fiscal year ending on March 31st. The second largest Android smartphone manufacturer in the world hopes to bolster its success in this core market during 2017.

The research also warned that India’s smartphone market has contracted for the first time in history this Q2 causing shipments to the country to fall 4% year on year to just under 27 million units. A portion of the blame goes to India’s new Goods and Services Tax, the report said.

Editor’s note: This was contributed by Elliott Zaagman a trainer, coach, and change management consultant who specializes in aiding Chinese companies as they globalize. To contact him, check him out on LinkedIn, or add ezaagman on WeChat.

This is the second in a two-part series measuring how Chinese companies perform on Western HR website, Glassdoor. The first part looks at Alibaba, Tencent, Baidu, and Huawei. This part looks at Lenovo, Cheetah Mobile, ZTE, and LeEco.

If you don’t spend much time on the English-language internet, Glassdoor may be a new name to you. As one of the most popular HR-related sites, it is a go-to source for job listings, news, and most famously, its employer reviews section. These reviews provide current and former employees a platform to give a 1-5 star rating for a company, with sections for “pros,” “cons,” and “advice to management.” For many job-seekers, checking out a company’s Glassdoor page is essential before accepting a job offer.

For those interested in working for Chinese tech companies, this can be a helpful resource to better understand what to expect from each company. For the companies themselves, it can provide valuable feedback for how to improve their practices for attracting and retaining both foreign talent overseas and globally-oriented talent in China.

In this second article, we look at 4 more top Chinese tech companies: Lenovo, Cheetah Mobile, ZTE, and LeEco. Part 1 covered Alibaba, Tencent, Baidu, Huawei. In order to better ensure that the reviews are statistically representative, only companies with at least 30 reviews have been taken into consideration. Furthermore, while all companies will inevitably have a few disgruntled employees who may have had negative experiences for their own personal reasons, this article attempts to look at broader trends in the employee reviews, in order to provide a clearer picture of the general culture, atmosphere, and tendencies of each company represented.

Lenovo

With a large international presence, particularly in the US, Lenovo has nearly 1,000 reviews. With a rating of 3.3, they are far from perfect, but it is interesting to see the nature of the feedback about the company, particularly in comparison to Huawei. Their rating of 3.3 stars is actually the highest of any company in this article that has a majority of non-Chinese reviewers. When results were filtered to only include offices outside of China, the star rating stayed roughly the same, which was a stark contrast to many of the other companies, whose outside-of-China scores were noticeably lower. Many of the respondents reported having worked for Lenovo for over five, or even ten years, and even the negative reviews tend to express some feelings of affection towards the company, praising its people, management, and culture. What is also worth noting is what is not mentioned. While Huawei’s reviews are filled with complaints about discrimination, language issues, cultural insensitivity and even ethical violations, these sorts of grievances were noticeably rare in Lenovo’s reviews.

What is also worth praising is that for seemingly all of its reviews, positive or negative, a Lenovo global talent acquisition specialist gave a detailed, thoughtful response. Kudos to Lenovo’s HR for staying engaged with their employees and giving thought, attention, and energy to their employer branding. Judging from the reviews, it seems that through both their expansion strategy and HR initiatives they have done a commendable job at localizing in the US market.

On the not-so-positive side of things, the company’s less-than-stellar performance and downsizings in recent years seem to cause some reviewers to be concerned about the future of the company and question its priorities. Frustration with inefficient and lengthy processes were also a common complaint.

Cheetah Mobile

With only 33 reviews, Cheetah Mobile had the smallest data set to draw from, and it was quite interesting.  Their positive reviews seemed a bit, well, over-the-top positive, and at the risk of editorializing, it seems a little… less-than-authentic. While it would be naïve not to assume that most companies do what they can to manipulate their Glassdoor scores, it’s impossible to ignore such an obvious red flag as the ones on Cheetah’s page.

The more negative reviews tell a very different story of the company, with complaints of language and cultural issues, poor interpersonal skills on the part of managers, and arrogance from the company’s leadership. As with just about every company profiled in this piece, work-life balance was also cited as a major issue.

ZTE

The trends on ZTE’s page look very similar to those on Huawei’s. Both had similar overall scores, with substantially lower scores when results were filtered for overseas results, (each company, for example, scored a 2.7 on their US reviews). In both cases, reviewers praised the companies for fair compensation and being a good place to gain early-career experience. The complaints were similar as well, largely focused on issues of local autonomy and culture. Looking at these reviews, a reasonable person could come to the conclusion that while ZTE and Huawei are interested in doing business internationally, they do not have the same ambitions for creating a global corporate culture.

The less positive reviews, many of which came from ZTE’s Texas office, seem to revolve around the cultural differences between US staff and the Chinese HQ. Reviewers complained about the lack of local staff, even after ZTE has been in the US market for over ten years. Other common complaints include language issues, unsatisfactory levels of autonomy, poor transparency, and even contempt for Americans in general.

LeEco

With an overall rating of 1.7, there is not much to say about LeEco’s Glassdoor page. With their well-documented rapid global expansion, cash crunch, and contraction, it is not surprising that many employees were left with a bad taste in their mouths. On the positive side, some reviewers did express positive experiences with LeEco’s collaborative team environment and opportunities to improve Chinese language and interpretation skills. But the more negative ones were far more numerous…

What’s an interesting point about the negative feedback that LeEco receives on its Glassdoor page is that the core issues that led to LeEco’s struggles (rapid overexpansion, poor financial management) were not anywhere near the most frequently mentioned complaints. Rather, the “cons” sections of LeEco reviews ran the gamut from dishonesty in the recruitment process, failure to localize to meet the needs of overseas markets, favoritism of Chinese employees and discrimination against non-Chinese ones, poor communication, nasty internal politics, and even racism, fraud, and corruption.

Final Thoughts

• BAT were top performers, but also had relatively low numbers of reviews from those who were based outside of China. Also, while reports of unproductive internal politics and abusive managers are somewhat unavoidable, it may benefit the companies for their HR department to take these complaints seriously and evaluate how to address the root causes.
• Work-life balance seems to be an issue for just about all of these companies. It may just be a necessary byproduct of working in the fast-changing world of a Chinese tech company, but if that is the case, companies may want to consider how to improve employees’ experiences while they are working those long hours.
• For many of these companies, a lack of an inclusive culture for overseas staff is clearly an issue. These companies may want to establish talent development employees for some high-potential non-Chinese employees that include Chinese language lessons, cultural training, and opportunities for trust and relationship-building with the Chinese leaders of the company.
• Of all the companies with significant overseas presences, Lenovo seemed to be the best at managing its non-Chinese staff (in the second part). This may be a result of the growth-by-acquisition strategy that they have taken over the last 15 years, but credit should also be given to Chairman and CEO Yang Yuanqing and Global HR SVP Gina Qiao, who have actively taken steps to implement inclusive practices, including mandating that the board of directors is no more than 50 percent Chinese, appointing a “CDO,” (chief diversity officer), and investing heavily in English language and cultural education programs.

Finally, one last note from me: While fairness and objectivity were aimed for in writing this piece, I recognize that it oversights are inevitable. I welcome any questions or concerns from those who may be impacted by this article.

Chinese PC maker Lenovo plans to pour over US$ 1.2 billion into artificial intelligence, Internet of Things and big data in the next four years, as part of its efforts to diversify their operations amid the stalled growth of its PC and smartphone business, local media is reporting (in Chinese).

Lenovo CEO Yang Yuanqing said the annual investment in the above three areas will represent over one-fifth of the company’s total annual R&D expenditure by March 2021.

Lenovo remained the top PC vendor in the first quarter of 2017, garnering a 19.9% share in the global market by shipping 12.377 million units, IT research firm Gartner noted. Yet its rival HP has narrowed Lenovo’s lead with shipments of 12.118 million.

Among the company’s three main lines of business, namely data centers, mobile devices, and PCs and smart devices (PCSD), revenue from PCSD business accounted for around 70% of its total revenue for the three months ended Dec. 31, 2016, according to the firm’s Q3 FY 2016/17 results released this February.

As competition with its rivals has become even fiercer and growth in its PC and smartphone business has flatlined, Lenovo has been striving to diversify its revenue source and doubling down on artificial intelligence to explore new growth driver.

The company set up its own artificial intelligence lab in March, headed by AI expert Xu Feiyu, who once worked as a principal researcher at the German Research Center for Artificial Intelligence.

Last November, Lenovo appointed Dr. Yong Rui, former deputy managing director of Microsoft Research Asia, to become its chief technology officer, overseeing the company’s corporate research and technology organization, which covers artificial intelligence and big data analytics technologies, among others.

Lenovo is not alone in hopping on the bandwagon of artificial intelligence. China’s three internet giants Baidu, Alibaba and Tencent all have been stepping up efforts on this research.

Baidu set up Institute of Deep Learning in 2013 and has spent more than RMB 10 billion on its three AI research labs in recent years. Alibaba has introduced its ET program, an “artificial brain” able to tackle complex problems in medicine, urban planning, and the industrial sector. Tencent’s artificial intelligence lab, which was established less than one year ago, has also delivered stunning performance. Its artificial intelligence Fine Art (绝艺 in Chinese) won the 10th Computer Go UEC Cup in March.

Editor’s note: This originally appeared on China Tech Insights, an English research unit affiliated to Tencent’s Online Media Group.

• Tencent’s Go-playing AI bot Fine Art picks up 11 wins in competition in Japan;
• Baidu suffers an important loss of personnel
• Lenovo joins the race with new lab under Lenovo Corporate Research;
• Tencent & Alibaba both see content as an entrance point for users taking the lead from Toutiao in the midst of slowing smartphone growth;
• Further bad news for LeEco as another round of executive departures is announced.

Listen here or subscribe.

TechNode does not necessarily endorse the commentary made in this program.

Chinese PC-maker Lenovo yesterday appointed Ma Daojie (in Chinese), a former China Mobile executive, as the executive vice president of its China Mobile Business Group (MBG), as it tries to bolster its teetering smartphone business.

Ma, also ex-general manager of China Telecom’s mobile terminal subsidiary eSurfing, will report to Gina Qiao, Lenovo’s senior vice president and MGB co-president, and assist the China MBG achieve strategic breakthroughs and transformation.

The move comes after Jiang Zhen, a former mid-level Samsung executive, joined Lenovo last month as the firm’s vice president heading China MBG in product strategy and product management.

Moreover, the Chinese technology giant has already poached Gary Yu, former general manager at China Mobile’s Zhejiang subsidiary, to serve as its vice president in charge of smartphone sales.

The appointments signal Lenovo’s determination to revive the glory days of its smartphone business in China when it crowned the Chinese market with a share of 12.5% (in Chinese).

In recent years, the smartphone unit of the Chinese technology giant saw declines in both global shipment and revenue. It recorded an operating loss of US$ 112 million in the fiscal third quarter last year, with revenue tumbling 23% to $2.2 billion during the same period (in Chinese), according to the firm’s Q3 2016 report released in February.

With the PC market shrinking, Lenovo has been striving to diversify its revenue source, whose PC and smart device business account for around 70% of its total revenue, according to the financial report. However, it has not fared well in its endeavor into the smartphone business.

On Friday, Zhaopin.com announced their annual China Best Employer Award with Tencent as the #1 employer in China.

This annual award is jointly issued by Zhaopin and Peking University’s Institute of Social Science Survey. Now in its 11th consecutive year, the award has become a valuable reference for job seekers in China. This year, more than 9,700 companies participated in the selection, an increase of 80% over last year. The winners were selected based on their performance in brand strategy, reputation, organization structure, employee training, salary and welfare, and working environment. Their performance was evaluated via employee survey, expert opinion, online voting and HR questionnaire.

Award winners

Winners of the 2016 awards were led by a Top 10 that included, in order: Tencent, China Merchants Bank, BMW China, Alibaba, the People’s Insurance Company (Group) of China, Vanke, Ping An Insurance (Group) Company of China, IBM, Mercedes-Benz, and Starbucks, which are all leaders in their respective industries. The full ranked list of the Top 30 Employers is included below.

Among this year’s “Top 30 Employers”, 22 are local, indicating the rise of Chinese companies in both reputation and ability to compete for talent with prestigious global brands. In term of industries, seven companies are from IT/internet sector, six are from auto manufacturing, and four are from the finance sector.

Key insights from companies

“Attracting and retaining talent is a core competency in the New Economy,” said Sheng Guo, Chief Executive Officer and Director of Zhaopin. “How to recruit and retain talent is an essential strategy for employers to drive growth and success. We found in our survey that respect, welfare and benefits, and equality are the most important factors when employees are evaluating employers and trying to decide where to work.”

“The rise of workplace communities is a significant trend we have identified this year,” he added. “Workplace communities are against centralization and hierarchy in traditional organizations. In such emerging and dynamic communities, employees share the same values, are equal partners in flat structures, and are empowered to exercise their creativity.”

Besides the “Top 30 Employers in China”, Zhaopin also announced the “Best Employers for Female Workers”,  “Best Employers for University Students”, “Socially Responsible Employers of the Year” and “Employers with the Most Potential” for 2016.

Female employees more stable and loyal

Winners of the “Best Employers for Female Workers” this year included Alibaba, BMW China, Bank of Communications, JD.com, Joyoung, Microsoft China, Vipshop, Starbucks, Industrial and Commercial Bank of China, and Gree Electric Appliances.

Zhaopin’s survey found that female employees are more stable and loyal to their employers than male employees. About 38% of female employees have never changed jobs, compared with 27% for male employees. About 20% of female employees have worked for their current employers for 5 years and more, compared with 10% for male employees.

As for career goals over the next three years, female employees are giving more priority to improvement in skillsets, recognition of capabilities, and realization of self-value, while male employees are seeking career success and realization of self-value, according to Zhaopin survey.

Respect is key for college students

Winners of the “Best Employers for University Students” in 2016 included IBM, Wanda, GOME, Lenovo, Nestle, Tencent, Perfect World, Sina, IKEA and China International Marine Containers (Group).

When college students are looking for their ideal employers, the most important factor is “respect for employees.” Other key considerations for college students included good income outlook, equal and fair treatment, welfare and benefits, and an attractive company culture.

Foreign companies are still the top choice with 36.6% of college students, followed by state-own enterprises with 21.4%. The top five cities most attractive to college students are Beijing, Shanghai, Chengdu, Guangzhou, and Hangzhou. For college graduates, the average expected monthly salary for their first job is 5,792 yuan, according to Zhaopin’s survey.

Award Winners of 2014 and 2015

Top 30 Employers in China 2015: IBM, Baidu, Qihoo 360, BAIC Group, FAW, CGB, Shanghai Volkswagen, PICC Property and Casualty Company Limited, PINGAN, Hainan Airlines, China Southern Airlines, JD.com, Ifeng.com, China Minsheng Bank, SF Express, Canon, Toyota, Joyoung, Hisense, Deppon, Neusoft, China Eastern, BP China, A.O.Smith, Suning, Xdf.cn, Thyssenkrupp

Top 30 Employers in China 2014: Alibaba, China Merchants Bank, BMW, Tencent, FAW, Baidu, BAIC Group, PICC Property and Casualty Company Limited, Qihoo 360, Starbucks, Mercedes-Benz, IBM, Shanghai Volkswagen, Hainan Airlines, Ifeng.com, Canon, Bosch, JD.com, PINGAN, SF Express, CGB, Tsingtao, Lvdihn.com, BP China, NUSKIN, XCMG, WEICHAI, Neusoft, CreditEase

Image Credit: Zhaopin

Update: November 28, 2016 — Our sister site reports that Samsung has denied they are in talks with Lenovo.

Samsung is in negotiations with Lenovo, the largest IT company in China, to sell its PC business, according to thebell, a South Korean financial news site. This comes only two months after Samsung sold its printer business to HP.

While it is still uncertain whether the deal will go through, the transaction amount is expected to reach 850 million dollars USD. Samsung Electronics previously sold the printing solution division of its consumer electronics (CE) division to HP for US $1.05 billion.

On the back of this rumor, speculation now turns to how well Samsung has been doing with their PCs and whether this is part of a larger strategic pivot. Over the last few years, with the advance of a number of alternative and more portable smart devices such as smartphones, tablets, and watches, PCs have slowly fallen out of favor. According to IDC and Gartner reports, PC shipments have declined over the past few years. At the same time, Samsung’s competitiveness faded away with the advent of global competitors on the same top-tier PCs such as Lenovo and cheap PCs such Asus.

On the other hand, Lenovo has grown rapidly to become the world’s largest PC maker, accounting for 20% of worldwide shipments after entering as the mobile phone business in 2001 and acquiring IBM’s PC business in 2005.

Meanwhile, it is reported Lenovo also in negotiations with Fujitsu in Japan for acquiring its PC business. It is observed that since Lenovo is weighing two options, the deal with Samsung Electronics’ PC business has been sluggish for several months.

Samsung’s recent moves show its strong willingness to restrucute and reshape around mobile smart home appliances and connected cars with Artificial Intelligence. While selling the PC and printer business, Samsung also made a number of acquisitions.

Last month, Samsung Electronics acquired Harman, market leader in connected car solutions. A month before that, they acquired Viv, the next generation AI platform, founded by the original Siri developers.

Samsung Electronics also acquired Joyent, a cloud service provider, AdGear, a Quebec-based leading digital advertising technology company, and NewNet Communication Technologies, a Canadian company specialized in Rich Communications Services (RCS). Yesterday, Samsung acquired Quantum Dot Tech Company’s QD Vision, the US-based provider for consumer displays.

For Samsung, consumer appliances such as TVs, refrigerators, and washing machines are evolving into a smart home system combined with the Internet (IoT), making artificial intelligence, cloud, and data management system technology even more important.

U.S.-based PC vendors HP Inc. and Dell recorded a pleasant bump in sales this quarter, as North American PC shipments increased for the first time since 2014, according to a report released by Gartner on Monday.

Unfortunately Chinese PC giant Lenovo had less to celebrate, recording a 2.2 percent decline in shipments over the past year. The company managed to maintain their position as the top vendor globally, with a market share over 20 percent, but sluggish sales in the Asia Pacific region stopped the company from achieving positive growth.

The preliminary results showed that total PC sales declined by 6.4 percent in China, and 6.3 percent in the Asia Pacific. “Business confidence is weak in China, and this affects consumer buying patterns,” said the report.

Globally sales dipped by 5.2 percent, with North American vendors pulling ahead of their Asian counterparts. “All regions except North America experienced a PC shipment decline,” said Mikako Kitagawa, a principal analyst at Gartner.

“One of the ongoing problems in the PC market has been the price hike in selected regions due to the weakening local currency against the U.S. dollar.”

IDC, who also released preliminary data on PC shipments on Monday, predicted a milder global decline in sales, at 4.5 percent.

“The PC market continues to struggle as we wait for replacements to accelerate, along with some return of spending from phones, tablets, and other IT,” noted Worldwide PC Trackers & Forecasting VP Loren Loverde in the report.

Huawei has extended the scope of their patent-backed battle, now targeting U.S. telecommunications company T-Mobile. It comes as the Chinese smartphone vendor recently filed a second filing against Korean electronics maker Samsung over a patent dispute.

Huawei filed a complaint against T-Mobile on Tuesday to the U.S. District Court for the Eastern District of Texas, claiming the later company had infringed on a wireless network patent held by the Chinese company.

A handful of Chinese smartphone makers, including Huawei, Lenovo and ZTE have been rapidly acquiring and developing pools of patents in an attempt to challenge leading global companies as the Chinese vendors seek to expand.

In May, Huawei began legal action against Samsung int he U.S., claiming the Korean company had violated 11 patents pertaining to mobile technology. Yesterday it was revealed that Huawei filed a second patent suit against Samsung to a court in Shenzhen, where the Chinese company is based.

Huawei has been aggressively building out their high-end mobile business, looking to take a bigger bite out of the U.S. and European markets as local Chinese demand stagnates. The company has amassed over 50,000 patents as of the start of 2016.

Josh Horwitz from Quartz joins us in a discussion on Apple’s recent decision to invest in China’s largest ride hailing app, Didi Chuxing and the implications for Uber in their plans to conquer China and the rest of the world. We move beyond the obvious reasons, such as managing their diplomatic relations with the Chinese government, and dive into Apple’s preparation for their entrance into China similar to other automotive makers. In this episode, Josh also takes us through the intricacies of the Chinese government’s regulations of the transportation industry. Last but not least, we also discuss the power players behind Didi and Grab and how traditional “old” money are boiling into technology startups in Asia.

Download MP3 (30.1 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

• Josh Horwitz, Writer from Quartz
  • What interesting news has Josh been covering in Asia recently? [1:12]
    • Alibaba is buying not building its way into Southeast Asia
    • Netflix faces rivals in India and Southeast Asia that are better adapted to local realities.
    • A brief history of Chinese accounting shenanigans in America.
• The On-Demand Transportation Wars [2:09]
  • Since our last conversation, what’s the status of the industry’s dominant players? (Uber, Didi, Ola and Grab/Go-Jek) [2:28]
  • Grab and Go-Jek founders share a common story [3:30]
  • Uber vs Google Waze: What happened when self-driving cars met on-demand transportation? [4:38]
• Apple’s US$1B investment into Didi and Didi vs. Uber in China [8:34]
  • Why did the deal happen? What are the possible reasons? [8:58]
  • Is Apple’s investment in Didi really an investment into its own future?
    • Does Didi need Apple? [13:22]
      • A symbolic appeasement with the Chinese government or a way to buy “guanxi”?
    • The Chinese government has regulated the automotive industry since the 1980s and places strict restrictions on automotive OEMs with a 50:50 joint venture.  [15:30]
    • Example of 50:50 joint ventures in China’s automotive industries: car companies with state owned enterprises in China. For example, Ford has a joint venture with Changan [17:00]
    • How Apple plans to enter China by leveraging a partnership
      • What does Apple gain from investing in Didi? Counter example: Tesla is facing problems in China without a partner to sell their electric cars. [19:11]
    • Didi used a varied interest company (VIE) business structure similar to Alibaba – how does that affect its partnership with Apple? [20:00]
    • What does this mean for Uber in the online transportation wars? [24:20]
    • The power players behind Didi vs. Uber and Grab [27:14]
      • Didi: Who is Jean Liu who did the deal with Tim Cook from Apple and Wei Zheng, founder and CEO of Didi? (she’s the daughter of the Lenovo founder, Liu Chuanzhi).
      • Uber China: Liu Zhen, director of strategy, is Jean Liu’s cousin.
      • Grab’s Anthony Tan is the grandson of the founder of Tan Chong Motors, which owns the exclusive distribution to Nissan, a Japanese automotive company.
      • Jerry Yang is an adviser to Uber and did the deal with Alibaba when he was the CEO of Yahoo! [28:50]
    • Uber and leasing out cars and controlling the supply chain [29:51]
      • Is Grab doing the same thing as Uber in controlling the supply chain with their competitive advantage with Nissan through Tan Chong Motors?

China’s artificial intelligence industry received a huge boost of validation from the government on Wednesday, which announced its plans to create a “100 billion level” ($15 billion USD) artificial intelligence market by 2018.

According to state-owned media Xinhua News Agency, the government plans to roll out projects in smart home applications, smart cars, unmanned systems, wearables, and robotics over the next three years.

“According to the plan, China will improve the country’s economy and society, disrupt the core technologies of artificial intelligence, and increase our smart hardware supply capabilities,” stated the government in its announcement. “Over the next three years, the country will build a solid foundation for an innovative, active, collaborative, eco-friendly, and safe artificial intelligence industry.”

As per usual, the government’s announcement was vague. There were no details on how the government planned to achieve its ambitious goals, or what organizations will be involved. The announcement wasn’t explicit about its 2018 “100 billion levels” goal either.

To put that into perspective, according to consulting firm MarketsandMarkets, the world’s artificial intelligence market is predicted to be worth $5.05 billion USD by 2020. It’s worth noting that forecasts on the world’s artificial intelligence markets depend on how “artificial intelligence” is defined. In the Chinese government’s statement, artificial intelligence is defined as a “branch of computer science where machines have human-like intelligence” and includes robots, natural language processing, and image recognition.

Ever since AlphaGo and Lee Sodol faced off in five games of Go, awareness around artificial intelligence in China has risen sharply. But years before AI became trendy, China’s tech giants have been investing in AI technology, such as Chinese web services company Baidu. In 2014, Baidu recruited renowned artificial intelligence expert, Andrew Ng, as Chief Scientist and head of the company’s research initiative in the U.S., Baidu Research.

Mr. Ng is a professor at Stanford University and is well-known for his work on neural networks and deep learning. At Baidu, Mr. Ng’s research has focused on autonomous or self-driving cars, which the Chinese tech giant hopes to start selling in 2018.

This year, China’s startup world has seen a lot of capital pouring into AI, as well as big data and cloud computing, two industries closely tied to AI. Earlier this May, Lenovo launched a $500 million USD fund for startups in cloud computing, AI, and robotics. Just this week, Microsoft Ventures Accelerator announced its plans to launch an accelerator in Shanghai. Similar to its Beijing counterpart, the Shanghai accelerator will focus on projects around AI, deep learning, big data, and cloud computing.

For now, the government’s “100 billion” announcement is just talk. How the Chinese government plans to complement the country’s already burgeoning – and well-funded – artificial intelligence industry, remains to be seen.

Image credit: Shutterstock

Lenovo Group Ltd., China’s original computer giant and the world’s largest PC maker, announced the launch of a $500 million USD startup fund, as the company seeks to diversify their business amid stagnating smartphone and PC sales.

The fund, which will be managed internally by Lenovo Group, will search out investments in the artificial intelligence, robotics and cloud computing industries, the company’s vice president He Zhiqiang said at an event in Beijing on Wednesday.

Lenovo joins a handful of Chinese smartphone vendors looking to diversify outside of hardware in an attempt to chase profitability in a flat market. Both Lenovo and Xiaomi dropped from the top five smartphone vendors as of Q1 2016, according to a recent study from IDC.

Xiaomi has taken on a similar strategy, investing in up to 50 companies, up to 20 of which remain in stealth mode, with no current public exposure.

Lenovo has already invested $100 million USD in 30 companies according to their website. Current investments are mobile focussed, including smart home devices and games. The new investment appears to seek out more complex back-end technologies, that could potentially help the company diversify their core business.

A majority of Lenovo’s revenue is still generated from their personal computer business, though the company has acknowledged the rapidly slowing growth in the sector. In August 2015 they cut five percent of their non-manufacturing workforce as part of a $650 million USD cost cutting program.

The company recorded losses in late 2015 for the first time in more than six years, though returned to profitability according to their Q3 earnings reported this February.

Qualcomm has finally inked a licensing deal with Lenovo, the US chipmaker announced on Thursday, ending a 12-month period marred by delayed royalty payments from China’s biggest smartphone vendors following a damaging rift with the country’s government.

The deal covers Lenovo chips as well as Motorola, which was acquired by the Chinese hardware giant in late 2014. The fresh patent agreement grants Lenovo a royalty-bearing license to develop, manufacture and sell 3G and 4G devices built with Qualcomm technology.

Lenovo is the last of China’s five big smartphone makers to reach a deal with Qualcomm, whose stock price tumbled over 38 percent in 2015 amid troubles settling patent agreements with the cornerstone clients. Qualcomm’s stock price jumped almost two percent in after hours trading following the latest announcement.

Qualcomm’s patent fees account for some 60 percent of their total revenue, while Chinese business accounts for roughly half of the company’s total revenue.

Qualcomm came under fire from the Chinese government in November 2013, when they reportedly breached the country’s antitrust laws. Qualcomm was forced to pay a $975 million USD fine in February 2015, along with new conditions requiring Qualcomm to adjust royalty rates in future Chinese deals. Vendors capitalized on the legal spat to hold out on paying licensing fees. Notably Xiaomi waited until December 2015 to seal a patent deal with the US chipmaker.

Lenovo’s delay has also been linked to poor sales performance within their mobile division. The company has struggled to turn a profit on their handsets since the costly acquisition of Motorola coincided with a global slowdown in mobile sales.

Qualcomm Incorporated stock has leapt over 5 percent, the biggest single-day increase in four years, following news that they have settled new 3G and 4G license patent agreements with Xiaomi.

It’s a relief for the California-based chipmaker, which has seen its stock decline heavily in 2015 over licensing issues and slowing market demand.

“We are pleased to reach this new agreement with Xiaomi,” said Derek Aberle, President of Qualcomm in a release on Wednesday. “Qualcomm is committed to the success of its partners in China as they continue to grow their businesses.”

Qualcomm’s inability to collect licensing fees from Chinese smartphone vendors in particular has cut into the company’s bottom line. Licensing fees for mobile technology make up approximately 60 percent of the company’s total revenue.

To date, Qualcomm’s total decline in 2015 now sits at approximately 30 percent. A tough smartphone market has also contributed to the company’s slide, as top suppliers Apple and Samsung increasingly rely on in-house components.

Qualcomm accepted a $975 million USD fine in February from China’s National Development and Reform commission following an inquiry into antitrust violations. The process caused the company’s licensing negotiations in China to stall, though they have since been strongly pursuing vendors.

They are still yet to close licensing discussions with Lenovo. The Chinese smartphone maker is struggling to bring their smartphone business back to profitability after acquiring Motorola. Lenovo could potentially roll the payments over to 2016.

Neither Xiaomi nor Qualcomm have revealed specific details of the latest licensing agreement.

Lenovo has joined forces with Razer, a world leader in gaming devices, to launch high-performance desktop hardware, the only PC sector still seeing significant growth in 2015.

Lenovo will leverage Razer’s concentrated gaming community to boost sales of high-performance PCs, as the company seeks to improve profitability following their $714 million USD net loss last quarter.

The co-branded device will launch in 2016, according to Razer, and will feature the game company’s trademark lighting effects. “Razer matches Lenovo’s scale and broad appeal with a high-touch dedication to the gaming community,” Razer said in a release.

“Additionally, both companies are looking to jointly double down efforts to fast track the development of new technologies, including gaming experience enhancements. ”

While PC sales are shrinking globally, gaming hardware has experienced a resurgence, prompting the world’s leading PC vendors to increasingly target gaming communities.

China has a particularly healthy appetite for gaming PCs. Currently PCs are the top gaming device by revenue in China, with an expected revenue of $16.8 billion USD in 2015, far outweighing mobile and console gaming.

Lenovo is now fighting their way back to net profitability due to the costs of integrating recent acquisitions Motorola and the IMB x86 server business. While Lenovo’s PC business has remained profitable in itself, its growth is slowing according to second-quarter financial results.

The company is not known for their gaming computers, though it has bullishly cut into the market over the past two years. This September Lenovo released their Y-series laptops and desktops, designed for the company’s growing cult fanbase of gamers.

Lenovo isn’t the only company that has turned to high-performance PCs for salvation in a slowing market. Acer and Asus have also made strong commitments to gaming hardware. Graphics specialist Nvidia also saw earnings surge as of this November due to market demand for gaming graphics processing units (CPU), now making up 58% of the company’s total revenue.

Lenovo’s stock price has rallied somewhat in the past three months after shedding almost 30% over poor market share figures.

After rocketing to the top of China’s smartphone game, Xiaomi is reportedly taking on a new challenge: notebooks.

According to a report from Bloomberg the smartphone vendor is in talks with Samsung to source the memory chips and displays for a device that could be released as soon as 2016, putting them in direct competition with Apple and Lenovo.

A separate source quoted in DigiTimes says “Xiaomi is planning to use the same strategy as the one for smartphones and will release notebooks with high price performance ratio.”

The same source believes the notebook will run Linux on a 15-inch screen and retail considerably lower than the comparable Macbook Air at 2,999RMB ($471 USD). Other potential partners in the project include Inventec and Apple manufacturer Foxconn.

As of this year Xiaomi has shot ahead of competitors in the Chinese market with the promise of a high quality product with a low-end price. They are known for their slick user interface and creative custom OS, though it remains to be seen whether the company is capable of transferring that concentrated success into such a saturated new market.

PC sales have faltered in 2015, slipping almost 9% according to IDC. But the move into laptops could be an attempt to diversify in the face of poor smartphone sales. According to a Gartner report released in August this year smartphone sales reached a record slowdown, recording the poorest growth numbers since 2013.

While Xiaomi still managed to come out on top, their main market competitor in the smartphone sector, Apple, slipped to third place behind Huawei despite and increase in sales, signaling a tough market. Lenovo, who would be Xiaomi’s biggest competitor in the Chinese notebook market, has the fourth largest market share in terms of smartphones.

Xiaomi has extended into a range of other product lines outside its smartphone business, but none have been as technically challenging as notebooks. Their product line includes air purifiers, battery packs, headphones, tablets, fit bands and other tech accessories.

@CateCadell

Related Articles:

Xiaomi Teams Up With Foxconn To Make Phones In India

Xiaomi Releases Latest 4K Smart TV: It’s Thin, It’s Cheap.

Xiaomi Leaves Asia For The First Time With Brazil Launch

Image Credit: Shutterstock

Paytm, a leading Indian mobile payment platform that is backed by Alibaba’s Ant Financial, is one of 11 Indian payment banks that has been granted “in-principle” approval to set up payment banks.

The newly minted payment banks will go through an 18 month provisional period before they can receive a full license, according to the Reserve Bank of India. The new banks will have the ability to provide debit card services, online banking and online transfers. The newly approved licenses are tipped to stimulate e-commerce in India, where credit card penetration is still comparatively low. 

Alibaba’s banking affiliate Ant Financial owns a 40% stake in Paytm, which like Alipay is a payment wallet system aimed at facilitating ecommerce. Paytm currently holds around 60% of the mobile wallet market share in India, with over 20 million users. While the transaction rate is still relatively low (compared to Alipay’s 300 million users and 80 million daily transactions) it’s hoped the partnership will help Paytm extend their lead in the underserved Indian online payments arena.

Alibaba and its affiliates have taken a strong interest in India’s burgeoning e-commerce sector. Earlier this week, they led a $500 million USD investment in Snapdeal, which has some similarities with Alibaba’s core retail business. Also involved in the round was Taiwan’s Foxconn and Japan’s Softbank.

Snapdeal is one of three dominant e-commerce platforms, along with Flipkart and Amazon, which are vying for top spot in an increasingly competitive market. The introduction of the new banking licenses is expected to revitalize the payment ecosystem, which will hopefully see a range of new players develop in the coming years.

In the meantime, many of the large retail sectors remain primarily offline, including the smartphone market, which has become a focus for Chinese companies of late. This week Lenovo-backed Motorola announced that it would be extending into brick and mortar stores in an attempt to tap into the 75% (approx.) of consumers that buy smartphones offline. Smartphone giant Xiaomi made a similar commitment earlier this month.

The Reserve Bank of India is looking to give out further licenses pending the success of the current round. Given the initial 11 were selected from a group of 42 applicants, it appears there are many companies who have faith in the growth of the payment banking sector in India.

@CateCadell

Related Stories:

India High Court Permits Xiaomi To Send 100K Handsets Home Following Ericsson-Led Infringement Suit

Indian Price Comparison Site YouTellMe Scoops US$100K Angel Funding

Alibaba Invites English Speakers to Complain About Fake Goods

Image Credit: Shutterstock

Chinese tech giant Lenovo is slashing over 3000 jobs in what CEO Yuanqing Yang calls a “tough market environment,” said the company on Thursday. Their Q1 earnings report showed a 51% drop in net income since the same time last year.

The company will cut one out of every 10 white collar jobs, totaling 5% of the company’s staff, in hopes of yielding $1.3 billion USD in savings annually. Lenovo shares fell by over 8% on Thursday following the release of the results showing a $300 million USD loss in its mobile division.

Lenovo acquired Motorola from Google last year, but the company has failed to thrive under its new management, with handset sales dropping by almost a third. Results from their PC division were similarly disappointing, declining by 7% over the last year.

Lenovo is taking a series of steps to combat market challenges, says the company, including a $600 million USD investment to consolidate the management structure between the Lenovo and Motorola smartphone divisions. 

HTC, a competitor to Lenovo’s smartphone business, is also making major cuts following poor earnings. The company revealed that it would be seeking to cut operating expenses by 35% following $250 million USD after-tax loss. 

It’s been a tough period for Chinese smartphone makers as demand has slowed in the first half of the year. Even market leaders Apple and Xiaomi have missed their estimates in the increasingly competitive landscape. Chinese players are now making a strong play to enter less-crowded emerging markets including India and Brazil.

Lenovo mentioned that currency fluctuations in Latin America had also taken a toll on their revenue, but that their efforts to extend globally had been generally supportive of the overall business.

Last quarter, we faced perhaps the toughest market environment in recent years…” said Yuanqing Yang, CEO and Chairman of Lenovo. “To build long term, sustainable growth, we must take proactive and decisive actions in every part of the business.”

@CateCadell 

Image Credit: Shutterstock

Motorola will be re-entering an increasingly competitive Chinese smartphone market next month when it releases the new Moto X, and Moto G. The announcement comes three months after Lenovo announced they had completed a US$2.9 billion purchase of Motorola’s mobility from Google.

The smartphone maker has timed its release with the Chinese Spring Festival, according to a blog post made by the company on Monday. Lenovo pushed forward with the anticipated release despite CEO Yang Yuanqing calling the Chinese market “saturated” earlier this year, claiming the company would have to find “new growth areas” to stay competitive.

Chinese smartphone makers saw intense growth in 2014. Last week, Xiaomi CEO Lei Jun claimed that the company had sold 61.12 million smartphones, making a 227% increase over the previous year’s sales. At the same time, Huawei shipments rose 40% from 2013, with 34.27 million sets sold in the first 6 months of 2014.

Motorola also announced they would be releasing a Moto X ‘Pro’ model, which according to its specifications, appears to be similar in specs to the Nexus 6, with a 6-inch QHD display. They did not release any base price points and it’s still unclear whether they will adopt special pricing in China. Currently, the Moto X 2nd generation is still retailing upwards of US$500, while the Moto G is more affordable, just under US$200. Meanwhile Xiaomi’s competing models begin at around US$100.

Lenovo itself previewed the P90 this week, which will compete with the Motorola products when it is also released in February. Lenovo CEO Yang has made it clear in the past that both brands will be maintained, and he will continue to “make [Motorola] stronger.” Lenovo released the teaser for hands-on P90 display at the 2015 Consumer Electronics Show (CES) held in Vegas this week. The P90 has similar dimensions to the Nexus 6, with a 5.5 inch display, and will be released alongside a headphone jack flash device designed specifically for selfies. Unlike the Motorola products Lenovo’s P90 will not be released in the US.

Image Source: Motorola.com

Legend Holdings Corporation, the parent company of PC and smartphone maker Lenovo Group (HK.0992), has invested an undisclosed amount of financing in P2P lending site eLoancn. Some local media has reported that the investment is around RMB900 million (US$147 million).

Founded in 2007 as one of the earliest P2P platforms in China, eLoancn is a Wenzhou-based online lending platform where members can borrow and lend money among themselves at better interest rates than a bank typically offers. eLoancn differentiates itself from peers with a special focus on agriculture, farming and rural areas. Its main business comes from farmers’ personal loans, which are mainly used for agricultural reproduction and breeding.

The company claimed to have set up more than 1,000 operation centers across over 100 cities in China. According to the site, it recorded a turnover of RMB300 million in 2013 and RMB1.72 billion this year as of October.

Although the founding team will lose controlling stakes in the company after the capital injection, Wang Sicong, eLoancn founder and CEO, disclosed that the new controlling shareholder has granted them the right to maintain operations.

Wang added that the funding will be used for market expansion, acquisition and IT system upgrading.

Legend Holdings has initiated a series of measures to explore internet-related business. Lenovo has launched a project for smart hardware, named New Business Development (NewBD, or NBD), and is planning to establish an internet-focused smart device company next year to tap the fast-growing consumer mobile device market in China.

Online finance is also an important part of the company’s long-term development program. Legend Holdings’s current financial units include offline payment company Lakala, Zhengqi Financial, a financial company targeting SMEs, commercial bank Hankou Bank, and insurance company UIB.

Lenovo Smart Glasses Product Manager Bai Jie Wearing New Glasses

Three months ago, Lenovo launched its internet-based business platform New Business Development (NBD) together with the first wave of four smart devices: two smart glasses, a smart air cleaner and a smart router. For the smart glasses product line, the company revealed the details and prototype for M100, the smart glasses targeted at industry users, but left New Glass, the commercial version, relatively unclear.

The Chinese laptop and smartphone maker later demonstrated New Glass at the annual gala of crowdfunding reality TV show The Makers on October 19, to offer insights into the gadget.

New Glass is specifically designed for Chinese consumers in collaboration with Ceyes (or Yunshizhitong). The product comes with a detachable module with a battery attached at user’s necks via a cable. The device runs on Android and has a single display that sits just in front of your right eye. Unlike most smart glasses on the market, the upper part of the glasses do not include the spectacle frame. They can be clipped to users’ glasses, thus avoiding the inconvenience of adapting to new frames, explained Bai Jie, head of Lenovo’s smart glasses project.

Loaded with Chinese-language operating system, the device boasts a 8MP camera and a 1300mAh battery that can give a full day of life when synced to your phone. New Glass can be controlled via smartphone or voice, while Bai disclosed the company is developing a smart ring that can be used to control the glasses. Bai also said the price tag of this device will be on par with that for a medium-or high-end smartphone.

The M100 has gone on sale to industry developers for RMB8,000 (US$1,298), which includes software support. Bai said the its current users mainly fall into three categories: system developers, techies and games developers.

China’s smart glasses industry is getting more and more players. Google Glass, the pioneer of in this field, is ready to explore the Chinese market and domestic internet giant Baidu just released Baidu Eye. Though it’s still an emerging industry, having further players will help familiarise users as they bid to create a more mature market, according to Bai.

In addition to the NBD program, Lenovo recently announced that it will establish an internet-focused smart device company next year to tap the fast-growing consumer mobile device market in China.

Laptop and smartphone maker Lenovo launched today a project for smart hardware, named New Business Development (NewBD, or NBD), in Beijing. Instead of developing smart hardware products in house, Lenovo chooses to invest in startups or cooperate with them.

The products by those startups will be sold on the NewBD site, with Alipay available for payments (The company says more payment solutions will be added). Lenovo will help them with software/hardware development, sales and marketing and customer service.

Sounds familiar? Yes, it takes a similar approach as that with JD.com and Alibaba. Lenovo’s advantages must be 1) it has established channels for selling consumer electronics products, and 2) it does know something about hardware production and distribution. In contrast, JD has a powerful online store that it has become one of the first Chinese consumers would visit whenever they want to buy smart hardware products. JD also launched a crowdfunding site very recently.

Xiaomi, the rising star in smart mobile & home device manufacturing, has adopted a similar approach, too. It has invested companies producing Xiaomi portable battery pack and the newly launched fitness band, and is selling them on its website where all the Xiaomi products are sold.

At the launch event today Lenovo unveiled four products, two smart glasses, a connected air purifier and a smart WiFi router. While Lenovo is a global company, it seems the smart hardware project is targeting at China market.

Both the two smart glasses, developed by the US-based Vuzix and Chinese company Ceyes (or Yunshizhitong), respectively, will be loaded with Chinese-language operating systems and apps.

The air purifier is produced by German company Luftmed and the smart WiFi router is by a Chinese startup XCloud. Air purifier is much in demand in nowadays China that many Chinese are concerned about air pollution, and the WiFi router is the newly emerged category that is considered a hub for controlling all the smart home devices.

Lenovo announced today to buy Motorola Mobility from Google for $2.91 billion. Google, however, will keep the majority of Motorola’s patents. Lenovo will pocket more than 2000 patents with the acquisition.

The deal is subject to approval by Chinese and US authorities.

Better known as a PC maker, Lenovo expanded to mobile phone business in 2002 through the establishment of a joint venture Xoceco, a local consumer electronics manufacturer. Three years later Lenovo acquired the stake held by Xoceco in the joint venture. Now Lenovo is one of the largest smartphone brands in terms of shipments.

Yang Yuanqing, CEO of Lenovo, seems very happy, when sharing the news with Chinese media today, about the fact that the company “would become the third largest smartphone maker worldwide, after having been the No. 1 in global personal computer market”. He added that the position of the world’s third largest isn’t the goal for the acquisition but that the capabilities and potential of Motorola is what Lenovo values.

The advantages of Motorola, he said, include “a strong brand, outstanding engineering and technologies, connections with telcos and retailers, markets covered including North America and Latin America.

The became the largest personal computer brand after it acquired the PC business from IBM. Last week Lenovo announced to acquire IBM’s x86 server business for $2.3 billion.

Lenovo Group held a press conference on Sept. 28 to release VIBE, a high-end smartphone brand, together with VIBE X the first smartphone under the brand priced at 2,899 yuan ($471.27), aiming to expand business into high-end smartphone market, which is currently dominated by Samsung and Apple (report in Chinese).

Targeted at post-80s and post-90 users, Lenovo VIBE is consisted of two product lines dubbed VIBE Z and VIBE X, which will focus on function and product design, respectively.

Without too much emphasis on hardware, Lenovo touted VIBE X in terms of product design, user experience and software innovation. Liu Jun, vice president of the company, said that hardware configuration is no longer the sole criterion that defines a high-tier smartphone.

Lenovo witnessed booming development in Chinese smartphone market in the past two years, with market share surged to 13% from 2% a year earlier. The shipment of Lenovo smartphones reached nearly 12 million units in the second quarter of this year, up more than 130% year-on-year. Lenovo noted in its most recent earning report that it was the fourth largest smartphone maker in the world and No. 2 in China, only next to Samsung.

Despite the huge shipment, Lenovo still records losses from smartphone business, because most of Lenovo smartphones are entry-level handsets with low price tags and margins, which are released to snap up market shares.

The release of a high-end smartphone brand is a crucial step for Lenovo to shake off the brand positioning as low-end products so as to explore high-tier market, said Liu Jun.

The market for smartphones priced higher than 2,000 yuan is dominated by foreign brands in the past two years and domestic brands only account for 19% of the market share (source in Chinese). Several domestic companies has tried to change the low-end brand poisoning by releasing products priced higher than 3,000 yuan. But the sales of these products did not live up to their expectations, such as Lenovo’s K900.

DoNews reported that Tencent has signed a strategic co-operation memorandum with Lenovo. The software and hardware companies will establish a close partnership on the enterprise level.

Some of Lenovo’s products will come with a pre-customized version of QQ Computer Manager. The Manager is intended to keep internet users safe and prevent from virus attacks.

The partnership will also develop a remote software support services market for Tencent QQ Computer Manager customers.

China’s largest PC maker by market share will open more than 1,200 new stores in tier 1 and 2 cities across China to strengthen its position in the world’s biggest market.

Of the 1,200 stores, 200 stores based in 4^th-6^th tier cities will focus on mobile internet products. The reasoning is that lower tier cities will “lead Lenovo’s future growth China, since first to third tier cities are facing saturation,” said Chen Xudong, VP of Lenovo and GM of its emerging markets unit.

This strategy is definitely long term as less than 10% of rural residents has access to computers, compared with 96.5% in tier 1 and 2 cities.

It is rumoured that Lenovo may purchase HP’s PC unit, which would certainly boost its sales.

Currently HP dominates the global market share with 18.1% last quarter, Dell has 12.9% and Lenovo has 12.2% according to IDC, a research firm. Chen said, “Our aim is to surpass Dell to become number two within two quarters,”

Lenovo China accounted for nearly 48% of the company’s total global sales in the second quarter, recording US$2.8 billion.

Although when I asked the audience if they had ever bought a Smart TV at home, only one of them raised the hand; even only a few of people were sure they would buy one in near future. Speakers from Lenovo, TCL, Technicolor, Orange France (Beijing) and BesTV at TechNode Collide were giving their positive opinion and advice on the Smart TV industry in China.

David Wei, VP and GM of Mobile Internet Lab & Digital Life Lab of Lenovo gave the keynote speech with the topic Smart TV, the Driving Force of Cloud Computing in Family Life. He defined the Smart TV:

the connected TV with OS, and the content includes broadcasting, packaged media, web content, and applications

David believes that eventually people is able to use Smart TV to watch TV or internet video, online shopping, play games, read news, social chat etc. He said that Smart TV, like Smart Phone, is not only driven by hardware manufacturers but the service providers, i.e. internet service providers, and content providers (traditional video content and internet video content). In China, a couple of companies including Skyworth, Hisense, TCL and Lenovo have released their first Smart TV products this year and the market will be boosted in 2012. “by 2015, 32.4 millions Smart TV will beat the traditional TV with 54% market share.” David Wei said.

TCL has just released its first Window 7 based Smart TV in early May, with partnership with Youku, PPS etc internet companies. Liu Yunfei, Director at TCL Research Supper Smart TV Center also believes that the Smart TV market has to open up and work closely with the popular internet service providers and thousands of applications development companies.

Smart TV sounds fancy but it is of course not an easy business. Kevin Rui, VP of Business Alliance at BesTV, the IPTV operator from Shanghai Media Group (SMG) gave his advice on Smart TV market. Although Smart TV is also (internet) connected TV, Kevin pointed out the TV audience are either kids or older people and both groups are actually not the heavy internet users. So how to educate them to use the internet service on TV is not an easy job; He said the applications on Smart TV are important but the app developers must note that TV is graphic-focus so we can not expect any smart phone apps is playable on TV. Kevin also believe the driving force of Smart TV market will be IT companies instead of TV manufacturers. “Like Apple and Google are now leading the Smart Phone market, not Nokia or other traditional phone makers.” He said in this speech. “Smart Phone is for individual, but Smart TV is for Family.”

To be honest, I am not really convinced to buy a Smart TV to replace my old one, yet. But once the price is acceptable and more TV-friendly apps and internet service are available, it will be definitely the choice.

Lenovo just announced recently that they have created a new business unit called Mobile, Digital Home, which will now manage devices such as LePhone, Tablets and TV. “We are putting the focus and investments in place to fully capitalize on these opportunities to drive growth in our business today and for many years to come”, said Yang Yuanqing, chief executive officer, Lenovo.

But what could have already been speculated from this push into this new Mobile and Digital Home group is the formation of a new group called Application and Services. With the rise of mobile app stores, especially Android based ones, Lenovo know that, it’s not only the device that wins customers but the content the devices have or can access.  This is clearly demonstrated by moves by the likes of Google to create Google TV which gives users a rich selection of applications, search and web capabilities. Content and utility is really what users want, the device is what enables that.

It is rumoured that the ex-head of Lenovo Laptops, Chang Cheng will lead this new Application and Services group.

When I saw it’s in my friend’s hand, I was wondering that why he brought a PSP with him as it was supposedly to be a business meeting. Obviously he saw the question on my face and kindly handed this gadget over to me. Wow, it is the Lenovo MID (Mobile Internet Device) which has been shown off at this year’s CES and was also reported by Engadget.

It is just a sample device for testing and software development. 4.8-inch touchscreen display, built-in camera and a number pad (for the phone usage) on the right side, its size is even larger than a PSP (I did not expect that)! Lenovo MID is running Linux powered operating system but the most exciting part of it is that it is WiMax powered. It is the first WiMax mobile device I have ever seen.

I did not get the full specification of Lenovo MID yet, but my friend said this MID would be in production in April. With the advantage of WiMax (>5 miles communication range), this device will be used in some games of Beijing Olympics, such as Rowing.

As a fan of electric gadget, I will not consider to buy one as it does looks too heavy. However, I’d love to see its product version and what its performance is in next several months.

A video (actually it is the only video) demoing some features of Lenovo MID can be found on YouTube,