Lenovo CEO has global ambitions

Updated: 2006-11-21 14:53


Bill Amelio, the American running the biggest computer company operating in China, has an ambitious agenda. In the next year, the chief executive of Lenovo Group Ltd. aims to boost the company's brand in the US and break into key emerging markets -- and beat the company's Chinese chairman, Yang Yuanqing, at ping pong.

Less than a year ago, Mr. Amelio left his job as head of Dell Inc.'s Asia operations to take the top job at Lenovo, which following its purchase of International Business Machines Corp.'s personal-computer division for $1.25 billion in 2004 had emerged as the world's third-largest computer company in terms of market share.

Now the 48-year-old CEO, who doesn't know how to say "jet lag" in Mandarin, spends his days zipping around the globe on a mission to bring Lenovo out from under IBM's shadow and transform the company into an industry juggernaut with the same brand clout as its chief competitors, Hewlett-Packard Co. and Dell, Nos. 1 and 2 respectively in terms of global market share. Among his first-year accomplishments: launching a $100 million restructuring effort to push the former IBM computer arm toward profitability, expanding Lenovo's reach from the business market to consumers, and enlisting athletes like Brazilian soccer star Ronaldinho in advertising campaigns aimed at raising Lenovo's profile.

In his first year on the job, Mr. Amelio also has become a major headache for his former employer. He has poached five senior Dell executives since August, including Gerry Smith, an expert in supply-chain management, which has long been one of Lenovo's weak points and one of Dell's strengths.

Mr. Amelio has had a few headaches of his own at the helm of Lenovo, ranging from anti-China sentiment to a major battery recall after a Lenovo laptop caught fire at Los Angeles International airport. Earlier this year, members of the US Congress voiced security concerns about the federal government's contracts with Lenovo, saying they were worried about buying computers from a Chinese company. Mr. Amelio also is battling a threat from behind, as Taiwan-based Acer Computer Inc., the world's fourth-largest PC company, experiences explosive growth.

Lenovo's third-quarter results suggest Mr. Amelio has plenty of work ahead. The company lost market share in the US, and net profit fell 16% from a year earlier.

During a stop in Hong Kong last week, Mr. Amelio talked about managing across cultures and competition with Dell. Excerpts follow.

The Wall Street Journal: Do you still consider Lenovo a Chinese company?

Mr. Amelio: We're a global company. We actually rotate the headquarters between Beijing, Hong Kong, Singapore, Raleigh [North Carolina] and Paris. Instead of having everyone travel to me, I travel to them. I feel like a gypsy at times, running around with my bag, unloading it and loading it.

WSJ: What's your remedy for jet lag?

Mr. Amelio: You hit the ground and you work out. You get energized. Works like a charm.

WSJ: What kind of cultural issues come up between the American and Chinese sides of the company?

Mr. Amelio: Every day there's something. On both sides, you need to have great trust in your colleagues to know that their intentions are good, even though the words might not come out right.

In the US and Europe, we have highly opinionated executives who like to make their voices heard. The China team tends to listen more and express themselves more thoughtfully. The Americans and Europeans need to know that if a Chinese colleague is nodding silently, it doesn't mean they're agreeing. We also have a program in place to teach our China team better confrontational management skills.

The Chinese team also tends to be very, very thorough -- and sometimes when you want to get something implemented, it's important to have conciseness.

Sometimes it's great to rally the whole team around something that everybody is interested in. Last week, we had an event where we brought in the 1992 Chinese Olympic ping pong champion, and had him play our executives. Our chairman is the reigning champion [at the company].

WSJ: How's your Mandarin?

Mr. Amelio: I can say "hello" and "thank you." Ni Hao. At some point, I'm going to do an immersion program.

WSJ: Earlier this year, the US State Department said it wouldn't use Lenovo computers for classified work, after members of Congress raised concerns about the fact that the Chinese government owns 27% of the company. Was the concern legitimate?

Mr. Amelio: There is no risk to the US government in using Lenovo products. Period. Full stop. There are no backdoor surveillance activities or spy chips or any of the like associated with any of our computers. Essentially, and unfortunately, this was wrapped up with political issues associated with China.

WSJ: There are a lot of rumors out there that Lenovo is working on a $100 PC. What's the story?

Mr. Amelio: We're not there yet, but we've just announced a program in India and China with Microsoft and Intel that allows people to get access to a PC for somewhere between $100 and $150. The strategy goes like this: We take a fully functioning PC, and we drop the cost in half. The bank picks up one half, and the customer picks up the other half. Then the customer buys computer cards, just like you buy phone cards. You can buy a card for, say, 10 hours of computing. Over time, you essentially buy back the computer from the bank by buying computer cards. This opens up computing to people who would never be able to afford it otherwise.

WSJ: How do Lenovo's marketing strategies differ around the world?

Mr. Amelio: In India, we work with Bollywood actors and do key product placements on game shows. Outside of the US, soccer is very popular, so we hired Ronaldinho to do ads for us. In the US, we're working with the NBA [the National Basketball Association]. Another way is through the Olympics, which have broad appeal around the world. We're doing some interesting stuff with blogs, too -- check out the Design Matters blog on Lenovoblogs.com.

WSJ: What's in store for the next generation of Lenovo/IBM ThinkPads?

Mr. Amelio: Fingerprint swipe readers. If you have 30 different passwords, they're all stored on your fingerprint, and you don't have to remember them all.

We like to take ideas from other industries and apply them to our computers. Take the roll cage around cars that protects people when they get in an accident. We've put a roll cage around the LCD screen in a ThinkPad, so if you drop the computer, you might not break the glass.

WSJ: Last quarter, you lost market share in the US What's your strategy going forward?

Mr. Amelio: The issue in the American market is that historically we've played in the large-account space. That market shrank this past quarter, creating a lot of aggressive pricing. Our problem is that we haven't been in the transaction space, targeting small and medium businesses and consumers. As we gear up that part of our business, you'll see us gain share.

We also need to get our supply chain around the world as efficient as it is in China. And we need to get our brand as known outside China as it is inside China.

WSJ: Does the US market still matter, when there are billions of potential computer users in emerging markets like China and India?

Mr. Amelio: When you look at the size of the US market, it'd be hard to say it doesn't matter. But the emerging markets are critical for our success. We've got a great position in China, and we're migrating that model to India, and we'll do that across many of the emerging markets, whether it's Brazil or Russia.

WSJ: You've said that American companies typically use a "colonial approach" when they enter the global market. What's different about Lenovo's strategy?

Mr. Amelio: [With a colonial approach] you send an effective executive on an expat assignment to Asia. They hire talent in-country. The downside is that you tend to hire people through the filter of the language that you speak, and you don't get the best talent. It's hard to identify talent if you're conducting the job interview in English.

In all the previous jobs I had before Lenovo, the struggle was finding midlevel managers in China. What I came to learn at Lenovo is that there's a lot of talent, but a lot of the best people aren't at a high level of English proficiency. If you look inside Lenovo, we've been hiring without a screen for English for years, and that means we really have depth when it comes to talent in China. Now we're working with our Chinese midlevel managers on English skills.

WSJ: How has Dell's recent price cutting affected Lenovo?

Mr. Amelio: It's kind of the same old, same old. In this industry, if you plotted it back for 26 years, you'd see that the average takedown rate is 30% per year. This is the dynamic that we live in, and the people that relish that do well.

But one thing that's nice is that we have the IBM ThinkPad brand, which is definitely positioned in the market as an innovative, higher price-point product. People will pay for innovation.

WSJ: Taiwan's Acer, the world's fourth-largest PC company, is growing faster than Lenovo, and the president has vowed to overtake Lenovo, to become the world's third-biggest PC company by the end of next year. How big a threat are they?

Mr. Amelio: I worry about every competitor. But as we enter into some new markets, you're going to see our trajectory change. Everywhere in the world outside of China and India, we haven't been selling to consumers and small businesses. In some markets, that's over 50% of the marketplace. The game is about to change as we enter that segment.

WSJ: What do you do when you're not working?

Mr. Amelio: I love to hang out in Singapore, where my family is. I don't play golf or anything, so when I'm home, I'm home. My wife and I have four kids, ages 21 months to 18. We also have two sixth-grade Cambodian girls that are living with us and going to school in Singapore. They're from the school that my wife and I started in Cambodia.

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