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Lenovo to build new center in W China

By Wang Xing (China Daily)
Updated: 2010-10-30 10:17

A worker tests a laptop at Lenovo's production base in Shanghai. [Photo/China Daily]

China's top PC maker plans expansion in inland regions

CHENGDU - China's top PC maker, Lenovo Group, said on Friday that it will build a new business center in west China's Sichuan province, as part of its efforts to support increasing demands and further expand business in the country's inland regions.

The world's fourth-largest PC maker by market share said it plans to invest at least $100 million with partners and suppliers in the initial phase of the new center in Chengdu, the capital of Sichuan province. The base will include a new factory and research center.

"Our business has seen rapid growth during the past few quarters and that put great pressure on our production capacity," said Yang Yuanqing, chief executive of Lenovo.

He said the new investment in Chengdu will greatly boost the company's expansion in the west China regions.

Lenovo's move came shortly after other PC makers added operations in the regions. Last month, Dell Inc said it will open a second major Chinese operations center next year in Chengdu, in addition to its current operation based in Xiamen city in Fujian province.

United States-based PC maker Hewlett-Packard also announced in 2008 that it will establish a new manufacturing plant in Chongqing. Yang said on Friday that the new manufacturing operation will have an annual capacity of more than 10 million units once it begins production at the end of 2011. Its new R&D center will employ nearly 1,000 people when it is fully built in the next three to five years, he said.

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Lenovo's core business was severely affected by the global financial crisis as corporate customers reduced IT spending to cut costs. However, business has been on the rise since November last year, as robust demand from emerging markets and a series of cost-saving measures helped offset declining sales in developed markets. Lenovo said in August that worldwide shipments grew 48.1 percent in the first fiscal quarter ended June from a year earlier, outpacing the industry growth rate of 20.9 percent.

That boosted the company's share of the global market to 10.2 percent, its first double-digit figure to date, Lenovo said. "After decades of fast growth, PC penetration in the East China area has slowed down, but demand in the west of the country has shown dynamic growth," said Chen Xudong, vice president of Lenovo, and general manager of its business in China.

China's PC shipments grew by only about 13 percent in the third quarter of this year, compared with 38.8 percent growth in the first quarter, according to figures from the research firm IDC. Antonio Wang, an analyst at IDC, said the slowdown is mainly due to consumer uncertainty about the outlook, and the government's recent efforts to cool the economy.