Lenovo’s India Takeaway
lex Li was serving as the worldwide product head for Lenovo in Taiwan early this year when he received a call from his boss, Shao Peng, Senior Vice President, Emerging Markets. Peng was looking for a capable hand to drive growth and restructure the channel mode of business in India, a key market for Lenovo. “He just asked me to go to India and a few weeks later, here I was,” says Li. He visited India for the first time just last year.
Six months later, Li has absorbed Indian culture. He listens to Indian music in his car, even when he is back home in China. He keeps a miniature idol of Ganesha in his car to ward off evil. He is, in fact, now referred to as “Alex Kumar” in the India office where he serves as the vice president of Transaction (Consumer and SMB) vertical of Lenovo India.
|
|
|
Image: Amit Verma
|
|
Alex Li is bringing something that is equally valuable for him to India: Lenovo’s China model | |
Li still shuttles between China and India but hopes to bring his family over to Bangalore to live with him. That will happen when it does but Li is bringing something that is equally valuable for him to India: Lenovo’s China model.
Lenovo’s China model is a way of working that has made Lenovo the largest selling personal computer (PC) maker in China, with 30 percent of the market share. The China model is essentially a way of distribution. Its uniqueness is in Lenovo’s ability to distribute through large format retail shops, corporate sales, regional distributors and even small retailers. The model allows Lenovo to provide seamless after-sales service as well.
Lenovo needs something special in India for sure. The company had its worst year in FY 2009 globally and India was no different. Sumanta Mukherjee, manager, computing products research firm, International Data Corporation (IDC) says, “They started on a high note, but somewhere down the line lost the momentum. There was a consistent slide in market share, quarter on quarter.” Li has been sent with the China model to fix exactly that.
It is always difficult to transplant something as local as a product distribution system but the senior team at Lenovo thinks that there are similarities between China and India. Lenovo CEO Yang Yuanqing believes most emerging markets are similar to China in consumer behaviour, channel distribution model, product trends and go-to-market strategy.
Li concurs: “In China and India, the festival seasons are peak time for sales. Customers like to touch and look and experience the products in both markets, hence they like to buy from the channel.” The company firmly believes that the formula that made Lenovo successful in China can be rolled out for other large emerging markets, India included. Globally as well in India, the company has split the business in two key verticals: Relationship (sale to large enterprise) and Transactional (sale to consumer and small and medium businesses). Li will build the transaction business for Lenovo in India.
The China Triumph
So how does the Lenovo model work in China? It sells through 6,000 outlets. In spite of its vast reach, it operates with a lean structure and cost efficiencies are so well built in that even the office space allotted to the staff is planned and accounted for. Every PC sold is tracked to its last mile. The service centre network is spread wide across the nation to enable prompt service.
Lenovo manages to reach even the inner parts of China. “We sell to distributors who sell to retailers and then it reaches customers,” says Amar Babu, managing director, Lenovo India. They know the inventory at every step, and post sales service is very important. The whole thing is to develop each partner, not just build a large number of partners. “In China we have partners where we have a very large share of their wallets. A lot of outlets, few partners, a lot of alignment,” says Babu.
The India Promise
The Indian market is slightly different. For starters it is much smaller. At roughly around 8 million units a year, it is a sixth of China’s market. For Lenovo though, to win in Asia, it believes it has to win India. Last year, even as its sales in Brazil, Russia and China grew despite the slowdown, its sales in India tanked. A poor performance in India, one of the most promising markets in the world, is hurting Lenovo. Its total market share in India according to IDC is only about 5 percent and it’s the number five player in the market.
What gives Babu and Li the confidence to transplant their China learning’s to Indian markets is the similarity in the trade characteristics in both countries. Babu believes Lenovo India is at the same stage of evolution where China was 10 years ago. “We had a single digit market share in China just 10 years ago. Today, it commands a significant lead in market share over its competitors.” He believes the Chinese formula will do the same in India.
Single Page View
