Liu Chuanzhi, computer manufacturer Lenovo’s chairman and founder, is grateful that Apple is seemingly ignoring China. “We are lucky that Steve Jobs has such a bad temper and doesn’t care about China,” Liu told the Financial Times. “If Apple were to spend the same effort on the Chinese consumer as we do, we would be in trouble.”
Apple hasn’t found much success in China with its iPhone, primarily because local laws prohibit China Unicom — the only carrier that legally offers the smartphone — from selling it with WiFi enabled. Chinese consumers have opted instead for cheaper grey-market iPhones that aren’t restricted. It doesn’t help that Apple has few official retail outlets in China, including a small number of Apple stores and resellers.
While other companies like Dell and HP are pouring more resources into China, Apple isn’t following suit. “Steve Jobs is a genius. He is the exception to my rule,” Liu said. “My theory is that a manager needs to be the string on which he puts one pearl after another. But Jobs himself is a big pearl.”
Lenovo is the leading computer manufacturer in China with 33.5 percent of market share, and now has 9 percent of the market globally. In an attempt to broaden its business outside of China, the company purchased IBM’s PC division in 2005, and acquired the Thinkpad brand in the process. But that plan didn’t go as well as it had hoped. In 2006, Lenovo held third place in the U.S. with 7 percent of the market — behind Dell and HP. Today, it doesn’t even rank among the top five computer companies in the U.S. In the third quarter of last year, Lenovo held only 4 percent of the U.S. market, according to a Gartner analyst.
At this point, Lenovo’s business is more focused on China than ever. When it acquired IBM PC, its business in China accounted for 37 percent of overall sales. Today, that number is closer to 47 percent. The company is planning its own Android-powered smartphone to take on the iPhone in China, the Lenovo LePhone. It’s betting on the fact that it knows China and can deliver a phone more targeted at Chinese consumers.
But Apple may not be ignoring the country for long. The company told the Financial Times that it plans to open a new Apple store in Shanghai this week and is slated to have 25 stores throughout China by the end of the year. China Unicom is in discussions to bring the iPhone 4 (hopefully unrestricted this time) and iPad to China as well — hopefully at a price point that can compete directly with grey-market sellers.