Personal-computer and smartphone maker Lenovo Group Ltd.said it would create a new company in China next year that focuses on selling mobile phones online. In China's smartphone market, Lenovo wants to fight fire with fire against rival Xiaomi by setting up a new mobile devices company that will use a separate brand, and leverage the Internet to sell directly to consumers. The still unnamed company will help Lenovo "attack the fast-growing consumer mobile device market in China," Lenovo said in a statement Wednesday.
Samsung and Apple may be the two biggest names in smartphones in the western world, but in China it’s all about Lenovo and Xiaomi. The two companies are among the most recognizable brands in the region, but Lenovo wants more: it’s about to create a new smartphone company for the Chinese market. While the new brand name hasn’t been announced, Lenovo says that it will officially open for business in April of 2015, and will focus on branded applications, consumer engagement and, like Xiaomi, selling devices online. The company’s core brand isn’t out of the running, though — Lenovo phones will still be available through local carriers and retailers.
Though details are scarce regarding the specifics of the company, we do know this: the new brand, set to be released under a different name, will reportedly launch on April 1st of 2015. Lenovo’s new company is set to focus solely on online sales, while keeping emphasis on branded applications and consumer engagement. Lenovo also made sure to mention that they will continue to sell Lenovo-branded devices through retailers and local carriers.
The new firm will not only focus on devices, but also on software and application development and close customer engagement. Lenovo has stated that it will share details about the legal structure, financing plans, business strategy, product plans and organizational structure in the coming months.
Effective April 1, Chen Xudong, currently president of Lenovo’s China geography and Asia Pacific – Emerging Markets (East Asia, Hong Kong, ASEAN and India), will become CEO of this new company. He has substantial marketing, sales and operational experience, and a proven track record in building Lenovo’s China business to record levels in PC, tablet and smartphone. Liu Jun, executive vice president and head of Lenovo’s Mobile Business Group, and George He, senior vice president and head of Lenovo’s Ecosystem and Cloud Services Group, will be the co-chairmen.
Tong Fuyao, currently vice president of China’s relationship business will become head of Lenovo’s China business. Ken Wong, currently vice president and general manager of Asia Pacific – Emerging Markets (East Asia, Hong Kong, ASEAN and India) will become head of this business, a role also previously held by Chen Xudong. Both will report to Gianfranco Lanci, Lenovo’s chief operating officer and head of the company’s Personal Computer Group.
In the next few months, details about legal structure, financing plans, business strategy, product plans and organizational structure will be announced. During this time, Chen Xudong will continue to lead the China and APEM business. At this time the company is not releasing further operational, financial or structural details.
The new smartphone company, which will have a different brand name, is part of Lenovo’s efforts to fend off fierce competition in China from Xiaomi Inc., a local smartphone startup that sells its handsets online while cultivating its fan base through its own software, services and entertainment offerings. Xiaomi is also known for being marketing savvy, engaging with consumers through online forums and social networks.
Other rivals in China, including Huawei Technologies and ZTE, have also been stepping up to compete with Xiaomi by focusing on online sales and offering phones at lower prices. In 2012, ZTE set up its own independently managed team to build a new smartphone brand called Nubia, which has grown in popularity in the country.