The China Government-supported entity made a huge splash in '05 via the acquisition of IBM’s “ThinkPad” personal computer business. That deal made Lenovo a player in the global computer market. Lenovo installed Dell Inc. veteran Bill Amelio as CEO and he was to infuse savvy American management tactics into Lenovo and run the business from North Carolina.Amelio is now history. He is replaced today by chairman Yang Yuanqing. Board member Liu Chuanzhi, one of the founders of the company a quarter century ago, is now chairman.
Liu says Lenovo, which reported a $97M fourth-quarter net loss, has been hurt by cutbacks by big American companies. His game plan: return Lenovo to its Chinese roots and then expand into other developing countries. That means less of an effort in the U.S., which is Lenovo’s biggest market with quarterly revenues of $904M. EMEA is next with $735M and China registers at $343M.
Lenovo claims it will remain on the international computer stage. That claim is suspect with a downgrade of its No. 1 market.
One worries what would happen if the Government of the People’s Republic of China follows Lenovo’s lead and begins to downsize its investment in U.S. bonds.
China knocked off Japan last year as the biggest holder of U.S. debt. At the end of November '08, China held $681B worth of Treasuries, compared to Japan’s $577 and Britain’s $360B.
The U.S. is relying on China to fund a substantial chunk of the economic stimulus package. If Beijing refuses to invest, the current economic stimulus action in D.C. could be all for naught--or at least much more costly for Uncle Sam who would have to borrow money at higher interest rates.
President Obama should urge all Americans to go out and buy a Lenovo computer. America needs that Chinese cash rolling in.