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Interview

Lenovo to pursue service-led transformation globally, CEO says

PC manufacturer to expand successful models in Japan to other markets

Lenovo had record-high software and service sales in the July-September quarter.   © Reuters

BEIJING -- Lenovo Group Chairman and CEO Yang Yuanqing says the major personal computer manufacturer will spread its "service-led transformation" from Japan to the rest of the world amid booming software and service sales.

Yang emphasized the company's business strategy in a written interview with Nikkei Inc. The interview came as Lenovo released its financial results for the July-September quarter on Tuesday, showing record-high software and service sales.

Yang noted that Lenovo is pushing ahead with a transformation aimed at improving services as part of its efforts to sell hardware such as PCs.

"Lenovo's approach to service-led transformation is showing excellent promise in the Japan market," Yang said.

"Lenovo has expanded beyond the hardware business in Japan, with the introduction of a wide range of solutions in services and software for the enterprise market, as well as services for consumers like our Suguge gaming subscription service," he said.

As a successful case, Yang cited Lenovo's business alliance with a major Japanese logistics company.

Yang said that he has felt a good response in the Japanese market and that Japan is one of the countries where Lenovo has been most successful in efforts to provide software as a service.

Lenovo CEO Yang Yuanqing says “Lenovo’s approach to service-led transformation is showing excellent promise in the Japan market.” (Photo courtesy of Lenovo Group)

He emphatically said, "Service-led transformation will become the growth engine for Lenovo in the future in Japan and around the world."

Referring to the impact of the novel coronavirus pandemic, Yang said, "I have talked about the long-term growth of the total technology market in the 'new normal' for two quarters."

"PCs and tablets are now one device per person, and the cloud infrastructure demand is growing rapidly because of the work-, learn- and play-from-home economy," he said.

Yang painted a bullish picture of this year's PC market.

"We expect the total PC market to grow well beyond current analyst forecasts to closer to 300 million units in calendar year 2020, around 25 million more than the total available market last year," he said.

Yang explained that amid the continued spread of the coronavirus around the world, Lenovo's strength lies in the fact that it is selling products in 180 countries and regions and has more than 30 production bases around the world.

Lenovo achieved high growth between April and September as sales in China, Europe, the Middle East and Africa surged by 20% from a year earlier, more than offsetting a slump in sales in the Americas and the Asia-Pacific region.

The pandemic has had a negative impact on some companies' supply chains.

But Yang emphasized the strength of Lenovo as a global company. "Lenovo is better placed than most to handle any ongoing global uncertainties and challenges thanks to our strong global supply chain," he said.

Lenovo intends to further expand its supply chain in the future. "We continue to invest in a manufacturing model that leverages a mix of both company-owned facilities and joint ventures as well as original design manufacturers," he said.

Some pundits say the prolonged U.S.-China confrontation will become a headwind for Lenovo's overseas operations.

But Yang said: "Lenovo is a global multinational company. We are proud of our Chinese heritage and roots and proud of what we continue to achieve in each of the 180 markets where we do business around the world."

Yang also expressed his confidence in Lenovo's future.

He said: "We continue to serve our customers around the world. ... We are confident that our global footprint continues to be a core strength and benefit to our customers. We also believe ... we're able to leverage our global nature and operating model to mitigate any potential challenges."

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