Lenovo chief says US and China need each other, globalisation won’t reverse course

Yang Yuanqing, the chairman and chief executive of Lenovo, said China needs technology products from the US, while the US needs the mainland market and its manufacturing resources

PUBLISHED : Friday, 25 May, 2018, 6:32am
UPDATED : Friday, 25 May, 2018, 2:41pm

The head of Lenovo Group said that despite trade tensions between the US and China, the world’s two biggest economies need each other as globalisation pushes forward.

“No country can develop just relying on themselves,” said Lenovo chairman and chief executive Yang Yuanqing in an interview in Hong Kong on Thursday. “China needs technology products from the US, while US companies need many things from China, not the least of which are the domestic market and manufacturing.”

“That’s the globalisation trend, and it will not reverse course,” Yang said.

His comments followed recent talks between senior officials from Beijing and Washington that have helped eased frictions between the two sides and averted a trade war for now.

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It also reflected how Lenovo, the world’s second-largest personal computer supplier, has conducted itself as a global enterprise, with operations in more than 160 countries, since it acquired the PC business of IBM in 2005. Lenovo has dual headquarters in Beijing and Raleigh, capital of the state of North Carolina in the US.

“We originated from China, but we are now a global company,” Yang said.

Hong Kong-listed Lenovo has so far escaped the scrutiny and suspicion that hangs over telecommunications equipment manufacturers Huawei Technologies and ZTE Corp. The two Shenzhen-based firms also have vast international operations, but both have been the target of US scrutiny for suspicion of being threats to national security.

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Such concerns have stymied efforts by Huawei and ZTE to sell network equipment to large US telecoms carriers.

The US recently imposed a seven-year export ban on ZTE for violating sanctions on selling telecoms equipment to Iran and North Korea. That ban prevents US hi-tech suppliers from selling software and other components, especially semiconductors, to ZTE.

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Huawei was reported to be under investigation for violating US trade sanctions on Iran, according to The Wall Street Journal, which cited unnamed sources.

The strained relations prompted Huawei founder and chief executive Ren Zhengfei to urge employees not to harbour any anti-US sentiments, according to a memo addressed to several departments, dated April 8 and seen by the South China Morning Post.

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Yang declined to comment on the security issues faced by Chinese hi-tech companies, saying “those topics are hot enough”.

Lenovo, which reported on Thursday a US$189 million net loss for its financial year ended March 31 due mainly to a one-time charge, will be among the first group of companies to launch a 5G smartphone in the US and other markets in 2019, according to Yang.

He said Lenovo also plans “to embed 5G [connectivity] into other kinds of devices, including PCs and tablets”.

5G, the latest advance in mobile communications technology, has become the biggest opportunity for China to emerge as a leader in telecoms development.

We originated from China, but we are now a global company
Yang Yuanqing, chairman and chief executive of Lenovo

Beijing has forecast the country’s total investments on 5G mobile networks to reach 2.8 trillion yuan (US$438 billion) from 2020 to 2030, which would mark the most expensive buildout of telecommunications infrastructure on the mainland.

Lenovo, however, has recently been the subject of speculation that it failed to back Huawei in the setting of the universal standard for 5G.

Although Lenovo initially voted for a technology led by US firm Qualcomm when a Huawei alternative was available, the vote in question was only for part of one specification. The company ultimately voted for Huawei’s Polar Code, which won the group vote in a third and final meeting in November 2016, Lenovo founder Liu Chuanzhi said in a post on the company’s WeChat channel last week.

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Yang said Lenovo was also sharpening its focus on artificial intelligence (AI), but different from the strategy of Chinese internet giants Baidu, Tencent Holdings and Alibaba Group Holding, the parent company of the South China Morning Post.

In a separate interview on Thursday, Lenovo chief operating officer Gianfranco Lanci said the goal was to have AI capabilities in a range of products, including personal computers, smartphones and so-called Internet of Things devices.

That would be followed by Lenovo entering the systems integration field, offering services and a new range of products to other manufacturers and large companies to automate their processes using AI.