Computer giant Lenovo plays down China roots


People walk past a Lenovo shop in Hefei, Anhui province in this October 18, 2013 file photo. China's Lenovo Group Ltd, the world's number one manufacturer of PCs, said net profit jumped 36 percent in its fiscal second quarter, beating estimates as it continues to chase growth through acquisitions. (JIANAN YU/REUTERS)
November 19, 2013

Computer giant Lenovo wants to tweak its image. That means emphasizing its global reach as the largest maker of personal computers and de-emphasizing its roots in China — where it has 35,000 employees.

“We are a global company,” said chief executive Yang Yuanquing in an interview with Washington Post reporters and members of the editorial board this week. He pointed to the interconnected nature of the global technology industry, where a smartphone’s chips may come from the United States or South Korea and its glass screen from Japan or China. “We source from the same providers as U.S. companies.”

Jay Parker, Lenovo’s president of North America, added: “We don’t characterize ourselves as a Chinese company.”

The executives noted that Lenovo has expanded, with 2,500 employees in the United States, mostly at its Morrisville, N.C., regional headquarters. It has research and development facilities in Japan, and on Monday announced plans to open a $100 million research and development plant in São Paulo, Brazil. Lenovo sees $5 billion to $6 billion in sales a year in North America, or about 20 percent of its business.

The company has even drawn from Hollywood: Last month, the Beijing-based firm hired actor Ashton Kutcher as a “product engineer” to help design and promote its Yoga tablet.

But Lenovo’s efforts to make further inroads in the North American market come when the PC industry has been struggling mightily. The rise of the iPad and other tablets, as well as mobile technology, has made Americans far less likely to jump at the latest laptop or desktop. Lenovo also makes tablets and smartphones, but those products have not made huge inroads in the United States.

The firm is also striving to shake the perception that it creates lower-quality, cheaper alternatives to Dell, Hewlett-Packard and Apple, analysts say. In 2005, the firm bought IBM’s ThinkPad line of laptops for $1.25 billion, gaining a trusted brand in business computing. Yang declined to discuss plans for acquisitions but said mergers can be a strategic method to break into a new market.

The company also closed a Bangalore, India, call center and hired 135 people to answer customers’ questions in the United States, a move that eased language and cultural frustrations and sharply improved U.S. customers’ satisfaction. Lenovo has opened an assembly plant in North Carolina with about 200 workers and has advertised more heavily to bolster its brand recognition.

Such efforts could also help in Washington, where some lawmakers look askance at Chinese companies.

Congressional lawmakers last year introduced a provision in the continuing resolution that would prevent agencies such as the Commerce Department, Justice Department and NASA from buying information technology from China. The law comes from concerns raised by Rep. Mike Rogers (R-Mich.), chairman of the House Intelligence Committee, that telecom equipment makers Huawei and ZTE were tapping into U.S. networks for data on Internet users.

Some analysts have criticized the language of the bill, saying it could unfairly cover too many technology companies. Yang said the legislation could hurt his business.

The bill “is written with ambiguous language,” said Yang, noting that Lenovo buys components for its laptops and smartphones from U.S. and other technology firms.

Jia Lynn Yang and Steve Mufson contributed to this report.

Follow The Post’s new tech blog, The Switch, where technology and policy connect.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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