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Home >> Opinion
UPDATED: 13:22, May 25, 2006
Lenovo disgruntled by unfair treatment in the US
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Lenovo Chairman Yang Yuanqing has made a strong rhetoric against the unfair treatment his company encountered in the US since its IBM PC acquisition and hoped the Chinese government would really give more support to businesses "going global".

Born last year, Lenovo won a 13 million US dollar worth of order for 16,000 ThinkCenter M51 desktops and equipment from the US Congress via its US partner CDW Government Inc. (CDW-G) in March this year.

Yang Yuanqing said the deal was part of the US Congress' global information system upgrading project and CDW-G has long been IT products supplier for government and educational institutions. The deal was reached through an open, fair process which fully conformed to the US Congress requirement.

However, the deal was questioned, upon its release, by Michael Wessel, member of the U.S.-China Economic and Security Review Commission, about the national security risk of using Chinese computers. Some American congressmen even asserted that Lenovo was controlled by the Chinese government and asked for investigations into the contract.

The U.S.-China Economic and Security Review Commission then wrote to Representative Frank Wolf, Chairman of Appropriation Subcommittee, to ask for a probe. Frank Wolf then required the Secretary of State give an explanation.

Under the pressure, the U.S. State Department replied Frank Wolf on May 18 that the department would amend the purchase process considering the change of the ownership of the IT equipment supplier.

The reply also ensured that Lenovo computers would only be used in non-confidential systems and go through more stringent reviews before they were put into use. Other departments of the US government were also informed to take similar measures.

Yang Yuanqing was disgruntled by the US government's attitude on this issue, describing it "extremely unfair" to Lenovo which is a market oriented enterprise.

He was concerned about the harm, including the impact on Lenovo's reputation and market performance on the U.S. market, that such doubts on the security of Lenovo products have caused on the company.

Lenovo was on a bumpy road in the US when it began to launch its IBM PC offer.

The U.S. Overseas Investment Commission (OIC) launched an investigation into the merger last February out of concerns over the "national security".

Lenovo was finally given a conditional, limited access into the market of the US government only after it signed a series of agreements with IBM and OIC. Only after the agreements were signed that the OIC gave green light to the acquisition.

"That has increased Lonovo's competition costs," complained Yang. In addition, the supplies in this successful bidding for the U.S. State Department contract are produced in the U.S. and Mexico, which fully conforms to the U.S. requirement for the manufacturing location of suppliers.

One year earlier, the media exposed an e-mail by American staff of Dell to an American consumer, saying that every dollar spent on IBM would be direct support to the Chinese government.

Yang did not give direct response to whether there were any interest groups behind the hurdles of the deal. But he thought the factors behind that, if there were, would be political and economic.

Lenovo's financial performance will not be impacted too much even if it loses the 13 million-dollar contract, said Yang. But he is worried that its image build-up as a responsible international business will be retarded to some extent as it is becoming increasingly international.

But there is another side of the coin. Qu Xiaodong, chief of the CCW Research, thought the hype of local media on the deal would turn out to be an advertisement of Lenovo and bring Lenovo to local consumers who are still not familiar with the new comer on the international market, including the American market.

He believed that professionals would not be misled by political attacks against Lenovo.

Yang Yuanqing urged the U.S. government to treat competition from businesses around the world fairly, as the Chinese government does to American businesses.

The US government is working on revision of its procurement process and Lenovo hopes the amendment will not exclude Lenovo out of the market.

By People's Daily Online

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