Lenovo Group Ltd, the world's fourth-largest computer maker, is focusing its overseas investment on emerging markets, where computer use is less prevalent, Chairman Yang Yuanqing told reporters yesterday.

"Our investment focus is emerging markets such as India, Brazil, Mexico, the Middle East and Eastern Europe," Yang said on the sidelines of China's annual session of parliament.

"These regions have lower market- penetration levels. And we have more experience than our competitors in these markets," he said, without offering details about specific investments.

Yang was generally upbeat about his company's prospects in 2008, but he said operating costs could begin to rise due to higher raw material and labor costs.

"We are worried that rising inflation, currency appreciation, and higher labor costs will lead to rising cost pressures," the executive said. "However, all competitors are facing the same pressures."

The company, which bought IBM's loss-making PC arm in 2005, is expected by analysts to fare better in 2008 than larger rivals Hewlett-Packard Co, Dell and Acer because of its dominance in Asia, especially China.

Lenovo beat market expectations by tripling third-quarter earnings thanks to strong Asian demand, which could help insulate as the global industry faces a tough 2008 and a US slowdown curbs technology spending.

Lenovo, which commands a third of the booming Chinese market and leads Asia in computer sales, is now targeting the fiercely fought, but unfamiliar American consumer arena even as fears mount of a sharp pullback in IT spending there.

"We are not dependent on the US market," Yang said.

The company also said it is still interested in listing in China's domestic A-share market, but added that its application to do so is still tied up with regulators.

"We are still waiting on regulatory approval," he said. "This is not something we can do whenever we decide to do it."

China's securities regulator warned listed companies in February against making big equity market offerings in a move to prop up stock indices that have slumped by about a third in the past five months.

Reuters

(HK Edition 03/12/2008 page2)