Lenovo aims to expand China PC market share

SHANGHAI (Reuters) - Lenovo, the world's third-largest maker of personal computers, aims to expand its share of China's fiercely competitive PC market to 35 percent by the end of 2005, a senior executive said on Wednesday.

China's biggest PC vendor, which bought IBM's struggling PC business for US$1.25 billion this year, controlled 32 percent of the world's number-two PC market at the end of June, said Liu Jun, Lenovo's chief operating officer for China.

Lenovo's own-brand business accounted for most of that, with about a 28 percent share, while the remainder came from IBM's former business in China.

Now, the expanded PC titan aims to outpace domestic market growth, Liu said, helping it to compete with Dell and Hewlett-Packard Co. in grabbing market share from smaller Chinese players.

"In China, in the past, we had a very rapid growth rate," Liu told reporters on the sidelines of an industry forum in Shanghai.

"Next we are (going to) extend the gap. I believe we can achieve 30 to 35 percent market share. I have the confidence we can do this by the end of the year," he said, adding that the 30 percent goal would be for just Lenovo brand business, while 35 percent would include the IBM business as well.

Lenovo, HP and Dell have been slugging it out in China's cut-throat PC arena, expanding their share of the market at the expense of smaller, generic players, analysts said.

Liu said Lenovo also hopes to close the gap against HP and Dell in the broader global market.

SHOULD BE CONFIDENT

"We hope we can double the growth rate, compared to the industry's," Liu said, referring to Lenovo's global sales.

According to market researchers IDC, global leader Dell was number four in China at the end of 2004 with a market share of 7.45 percent, and HP stood at 5.1 percent. Excluding IBM, Lenovo's market share at the end of last year was 26.3 percent.

IDC expects worldwide PC shipments this year to jump 14.1 percent to 204 million units.

It forecast that PC shipments in the Asia-Pacific would climb 14.8 percent in 2005, with China growing a tad faster at 14.9 percent.

Lenovo's landmark IBM acquisition allowed it to vault into the upper echelons of a hotly competitive global computer business.

The Chinese company's shares have surged by more than 50 percent since mid-July, as investor hopes grew that the company would quickly turn around the IBM division and become a global PC powerhouse.

Following the deal, Chief Executive Stephen Ward predicted that the firm would double its profit within three years.

Lenovo's shares climbed 1.4 percent on Wednesday, outperforming the Hong Kong benchmark's 0.2 percent gain.

Earlier this week, however, Chairman Yang Yuanqing cautioned that investors should lower their expectations for rapid growth while the company focuses on the long term.

"When our stock price went down after the acquisition I told our investors: You should have more confidence in this company," Yang told Reuters in an interview in Dubai.

"Right now I want to tell our investors to calm down and give us more time to fully integrate to get better performance."

Lenovo has no plans for now to open factories outside of China, the executive added.

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