The news that Chinese computer manufacturer Lenovo is in talks to purchase IBMs computer business is of great concern to Dell and other computer manufacturers, but it is also a lesson to all multinationals about globalization.
Globalization cuts both ways. The forces that allow US-based companies to quickly expand into foreign markets also allow foreign companies to quickly expand into the US market. And Lenovo is simply tearing a page from the corporate playbook: If you can’t grow market share, buy market share.
Lenovo has had global aspirations for some time. About a year ago it changed its name from Legend Computer to Lenovo in an effort to avoid trademark battles in overseas markets. But in the midst of expanding into new markets, the company began treading water in its domestic market. Dell has invested heavily in China and is growing quickly. Should Lenovo takes it eyes off its home market for too long, it could lose market share quickly (it currently has 29%).
So that’s why the IBM deal makes such great sense. IBM is a well-regarded brand globally and there is lots of room to get aggressive on pricing.
But if Lenovo does win IBM, I hope it does a good job of retaining the people within IBM who have been so successful over the years in international marketing. The IBM Web site, for example, is one of the best global Web sites around, while the Lenovo Web site is one of the worst.