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By Xin Bei
The largest overseas acquisition by Lenovo, China's largest personal computer maker, is a sign that more Chinese brands are to make their mark on the global stage.
The Chinese company signed a US$1.75 billion deal on Wednesday to buy the PC unit of IBM. The acquisition will expand the company's PC business fourfold, ranking third in the world.
Lenovo's acquisition has put the meat on the bones of the company's intention to go global, an intention that was manifested when it joined the International Olympic Committee's prestigious global sponsorship programme, The Olympic Programme (TOP), in March.
Though opinions are divided on the viability of this international business marriage, the significance of the Lenovo/IBM deal might be measured in ways other than profitability.
The PC unit is no longer regarded as a cash cow by the Big Blue, which is swiftly shifting its focus from the industry it once helped pioneer to higher-margin businesses such as computer services and software.
But what the deal will give Lenovo is not only an immediate jump from eighth place among global PC producers to No 3, but more importantly an unprecedented access to many Western markets.
After two decades of stunning expansion, the company, like a number of successful domestic manufacturers, is increasingly sharpening its competitive edge to claim status in the world market.
This is certainly a demanding task. For Lenovo, overseas sales accounted for less than 3 percent of its total revenue just few years ago.
Now, the alliance will offer Lenovo a rare chance to present itself to numerous foreign users.
Just as a grand wedding ceremony will not assure a happy marriage, the eye-catching acquisition deal itself can not guarantee Lenovo's future success.
But in view of the international labour division, IBM's further move into the service sector and Lenovo's climb-up along the value chain of manufacturing represent the underlying changes in the world economic map in line with comparative advantages. In this sense, the latest deal is definitely a win-win result for both.
As Chinese enterprises keep sharpening their competitive edge by capitalizing on the country's recognized comparative advantages, it is predictable that more of them will naturally follow suit.
So, let's hope Lenovo, the pioneer, fares well on the broader stage.
(China Daily December 10, 2004)
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