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Lenovo hopes to expand China PC market share

Lenovo, the world's third-largest maker of PC's, expects to expand its share of China's fiercely competitive market to 35% by year-end.

india Updated: Sep 28, 2005 12:30 IST

Lenovo, the world's third-largest maker of personal computers, expects to expand its share of China's fiercely competitive PC market to 35 per cent by the end of 2005, a senior executive said on Wednesday.

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

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

The trio have been slugging it out in the country's cut-throat PC arena, expanding their share of the market at the expense of smaller, generic players, analysts say.

"We hope we can double the growth rate, compared to the industry's," Liu told reporters on the sidelines of an industry forum in Shanghai, referring to Lenovo's global sales growth.

Asked if it was targeting a 35 percent market share, including IBM's sales, in China by the end of this year, Liu said: "Yes."

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

SHOULD BE CONFIDENT

Market researcher IDC expects worldwide PC shipments to jump 14.1 per cent to 204 million units this year.

This month, 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 per cent.

Excluding IBM, Lenovo's share of the country's market stood at just 28 per cent at the end of the second quarter.

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

Lenovo's shares have surged since mid-July, up more than 50 per cent over that period, 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 the firm should double its profit within three years.

Lenovo's shares climbed 1.41 per cent by midday, outperforming the Hong Kong market's 0.4 per cent gain.

They have soared by nearly half since it and IBM announced the closing of their merger on May 1, vastly outperforming the market's near-10 per cent climb over the same period.

But earlier this week, 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.", he concluded.

First Published: Sep 28, 2005 12:30 IST