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It's a strange time - just a day ago, on May 23, Lenovo released Q4 for fiscal year 2018/19 and its annual performance - Lenovo's annual revenue broke through the $50 billion mark for the first time, growing year by year for seven consecutive quarters, achieving a 261% multiplier of net profit in the off-season Q4 of the traditional hardware industry.
Unfortunately, this old national IT enterprise has not received encouragement and applause, but has fallen into a strange circle of "abuse" and "boycott" one after another.
Facts speak louder than words. Is association the conscience of the emperor? Is "withdrawing from China" entirely misread by the outside world? How do you think Lenovo does not develop its own chips and operating systems? Guan Wei, Senior Vice President of Lenovo Group's Global Supply Chain, and the media including Sohu Technologies have a dialogue. How can we correctly understand Lenovo and Lenovo's globalization?
Lenovo intends to "withdraw from China"?
Contrary to outside suspicions, Lenovo announced at the Global Supply Chain Conference on May 24 that it would invest more than $300 million, or more than 2 billion yuan, to build a new smart factory in Shenzhen and its surrounding areas, with plans to be completed in two to three years.
Guan Wei, senior vice president of Lenovo Group's global supply chain, said it was difficult for outsiders to understand the concept of $300 million. "The whole IT industry, even the household appliances industry, seldom heard such a large amount of figures, and $100 million was a very large investment."
Coupled with the Shenzhen plant, which is about to start construction, Lenovo has three own factories in China. Compared with other production lines in other parts of the world, the number of production lines in China is the first. Guan Wei added, "Ninety percent of Lenovo's own factories are made in China."
Guan Wei explained, "Compared with the two bases in Hefei and Wuhan, the main purpose of Shenzhen base is to backup each other with Hefei and Wuhan. On this basis, Lenovo will increase the research and development and manufacture of intelligent equipment in Shenzhen."
At the beginning of this year, Yang Yuanqing formulated a new intelligent transformation strategy (3S strategy) for Lenovo. In the future, Lenovo will make great efforts in the three fields of intelligent Internet of Things equipment, intelligent infrastructure and industry intelligence. The establishment of Shenzhen factory is the key step to promote the implementation of the strategy.
"Withdrawal from China" and abandonment of China's production lines are not only an inestimable loss in terms of investment returns, production and sales or strategic transformation, but also directly related to Lenovo's survival and death.
Lenovo headquarters in the United States?
Lenovo invested $300 million to build Shenzhen base, which proved Yang Yuanqing's earlier statement by putting a lot of money into practice. "Our base has always been in China, China has always been the core, we have never left China, and the strategic focus will be more inclined to China in the future." (See Sohu Science and Technology's earlier report "Yang Yuanqing: The US tariff increase has little impact on Lenovo, but has emergency preparedness".)
But Guan Wei, senior vice president of Lenovo Group's global supply chain, stressed to reporters, "We will not actively invest in new factories overseas, except for Shenzhen factories in China."
But before that, some netizens screenshot that Lenovo's global headquarters has moved to Raleigh, the United States. "Raleigh is Lenovo's headquarters in the United States and one of Lenovo's three global R&D centers (including Beijing, China, Yokohama, Japan)," Guan explained.
Lenovo has about 10,000 engineers worldwide, including more than 3,000 in the United States, more than 2,000 in Japan and more than 5,000 in China. In terms of R&D scale alone, Raleigh headquarters in the United States is not as good as Beijing headquarters.
In addition to R&D, Lenovo's mature global distribution of supply chains is reflected in CFO Huang Weiming's apology statement: "We have 36 manufacturing plants in Asia, Europe, North America and South America, 11 of which are Lenovo's own manufacturing bases."
Guan Wei told reporters that Lenovo's overseas production and manufacturing bases are mainly in India, Mexico and Brazil, not in the United States, and the world is only responsible for 10% of its production capacity. "Indian factories are acquired from IBM and Motorola; in Mexico, they are mainly for desktop computers and computers in South America and North America as a whole."The serverThe third is in Brazil, where local protection is somewhat unreasonable. China has to pay more than 70% tariffs to produce and ship to Brazil, but we have a 30% market share in Brazil.
Lenovo doesn't do its own chips and operating systems?
On May 23, Yang Yuanqing said at Lenovo's fourth quarter earnings meeting in fiscal year 18/19: Believing that globalization is an inevitable trend, a company does not need to do everything, so Lenovo does not intend to do operating systems and chips, will do its part, cooperate with trusted partners, and provide users with the best products.
Two days ago, on May 21, Ren Zhengfei expressed a similar view in the face of the domestic media. "For 30 years, American companies have been accompanying him."HUAWEIA large number of parts companies and device manufacturers in the United States have given Huawei great support for its growth. We Huawei will always need American chips, because we can't be isolated from the world, we should integrate into the world.
It can be said that Huawei and Lenovo share the same concept of global layout, but as far as the current situation is concerned, Lenovo and Huawei are facing different situations.
On the same day on May 23, Yang Yuanqing also said, "At present, the U.S. tariff policy basically does not include our Lenovo business, so it has little impact. But we are ready for an emergency.
Guan Wei told reporters, "In fact, Lenovo is very special, most of our supply chain is not outsourced, the outside world does not know, Lenovo even motherboard what is done by themselves, small to the application layer of chips we are doing, such as power-level chips."
Guan Wei disagreed with the label of Lenovo's "assembly plant." We just launched a folding screen computer and invested more than $30 million in R&D. However, compared with independent R&D, Guan Wei revealed that Lenovo's R&D investment is mainly in purchasing technology.
In Guan Wei's view, Lenovo is questioned for a deeper reason: "In fact, China's vitality is very high, but why do many people think that China's innovation is inferior to some countries? In fact, many times our ideas are not bad, but the short board is how to make products.
Why does Lenovo say that Sino-US trade frictions have little impact?
On the one hand, as Yang Yuanqing said, Lenovo's products are not included in the "US $200 billion tariff on Chinese imports to the United States increased from 10% to 25%" announced by the United States. On the other hand, it is also the main reason. Lenovo's contribution to the group's income is very balanced in each strategic region.
According to Lenovo's latest financial report for fiscal year 18/19, the contribution of China to total revenue is 23.8%, that of Asia-Pacific is 19.4%, that of North America is 21.2%, that of Latin America is 10.9%, and that of Europe, Middle East and Africa is 24.6%.
The United States is an important part of Lenovo's global strategy, but it is not a pillar.
Lenovo's strengths in global supply chains can also greatly reduce the impact of U.S. policy. At the media communication meeting on May 23, Yang Yuanqing, chairman and CEO of Lenovo Group, told the media, including Sohu Science and Technology, "Lenovo is a very globalized enterprise, our business is very balanced in all regions of the world, our supply chain is also very balanced, and many of our supply chains are owned by Lenovo itself, like ours. Many competitors are outsourced, which gives us great flexibility to adjust, which place produces more, which place produces less, we will adjust according to the situation of competition. Compared with our competitors, this aspect is actually an advantage of us.
This is exactly what CFO Huang Weiming said in his apology statement: "Even if individual regional policies may have an impact on us, we can still take ChinaSmart Manufacturing as the foundation to deal with possible problems by laying out the global industrial chain."
Guan Wei, senior vice president of Lenovo Group's global supply chain, affirmed the fundamental significance of China as Lenovo. "The secret of a manufacturing enterprise, or an enterprise's long-term development, is enterprise strategy in the short term, government policy in the medium term, and national character in the long run. Frankly speaking, I think the whole industrial environment of China is very good, and the Chinese government is very good. Supporting, we can say that China is the best place in the world in high-end intelligent manufacturing.