Lenovo to partner with NEC

09:21, January 27, 2011      

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China's largest PC manufacturer Lenovo will today take a major step into the Japanese market through a joint venture with Japan's NEC Co, according to the Nikkei Business Daily.

The joint venture will be based on Tokyo-based NEC Personal Products - a wholly owned subsidiary of NEC, with Lenovo expected to take a 51 percent stake in the partnership, the Nikkei reported Wednesday.

NEC will essentially transfer all its PC operations to the joint venture, but will continue its PC manufacturing base in the city of Yonezawa, Yamagata Prefecture, according to the report.

The Japanese industry leader's PC brands will remain in the market and will continue to provide existing consumers with after-sales services.

Both parties kept silent about the deal and Lenovo declined to confirm the reports.

"We cannot confirm the report at the moment, but what is certain is that NEC's own brands will continue in the market," Chen Shu, a public relations official with NEC (China) Co, told the Global Times Wednesday.

Market watchers believe the deal, if announced, would help Lenovo claim a chunk of Japan's notoriously closed market, resulting in a bigger slice of the global market share.

In 2010, NEC held a 12.4 percent market share in Japan for shipments, with Japan's PC shipments accounting for 5 percent of the global market, according to figures from research firm Frost & Sullivan.

Certain analysts foresaw a real evolution in Lenovo's global positioning with Ji Chendong, a consultant with Frost & Sullivan in Shanghai, telling the Global Times that "the deal, if achieved, is likely to help Lenovo overtake Taiwan's Acer Group as the third largest PC manufacturer in the world, given the small gap between them now."

Lenovo ranked fourth in the global PC market in the fourth quarter of 2010, with a 10.4 percent market share in terms of shipment, trailing Hewlett-Packard's 19.5 percent, Dell's 12.1 percent and Acer Group's 10.6 percent, according to figures released earlier this month by research firm IDC.

Analysts also pointed out that NEC could also benefit from the acquisition. "It would be wise for NEC to get rid of its low-margin PC unit and focus on its main business in cloud computing," said Wang Yang, director of China Research at market research firm iSuppli in Shanghai.

"NEC could also gain opportunities in China's market, making use of Lenovo's strong presence here," Ji at Frost & Sullivan said.

Source: Global Times
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