Chinese computer giant Lenovo is on the hunt for a European manufacturing plant and is expanding into the consumer PC market. Milko van Duijl (pictured) is president of Lenovo’s EMEA division.
Having bought IBM’s former PC division, how has the division been performing for Lenovo?
Our recent results saw us achieve an operating profit of US$105m and our share of the global personal computer market reach 8.2pc. The division has performed well for the company. We’ve been able to grow revenue while increasing profit as a percentage of revenue to 5pc for the past five consecutive quarters. That said, there is room for improvement and we know which markets to target and organically grow our business.
You’ve mentioned new trends in the marketplace, particularly a focus on emerging markets. How do you intend to capture these?
We’re embarking on a new strategy, which I term ‘world sourcing’. We are focusing on emerging fast-growth economies such as China, India, South America, Russia and the Middle East. We are seeing major shifts in global demographics. In the next few years, for example, GDP growth in China will surpass the US. Our world sourcing strategy will see us make manufacturing decisions in terms of costs and skills. Key systems for the Boeing Dreamliner 787, for instance, were built in India for costs and skills reasons. We are following that trend.
Does this mean going for the cheapest locations?
It’s about flexibility and in the context of world sourcing we’re transforming our overall structure globally. We have to think global, but act local. We will be Irish in Ireland, Indian in India and Nigerian in Nigeria. I hold a Dutch passport, but live in Paris. Our chairman is Chinese, but is based in North Carolina. The plan is to become radically decentralised. We have production hubs in Singapore, India and Mexico. We currently have an outsourcing partner in Hungary, but our plan is to locate our own manufacturing hub in Europe.
What locations are being considered for the new plant?
We will shortly make a final announcement as to owning our own manufacturing in Europe. We won’t be contracting it out, but we will do the full manufacturing of our desktop line in Europe. At present we are choosing between two specific locations. Our decision won’t take too much longer now.
Until now, Lenovo’s PC unit has been business focused, but that’s about to change to include the consumer. How will this happen?
The consumer business is incredibly important and we have established a separate business that will focus on retail partners and new consumer products. Our objective is to capture market share and gain increased revenue. We’ve just begun in France and South Africa and will roll out our consumer business during 2008.
By John Kennedy