Company to expand sales channels to revive struggling mobile division

Updated 2017-04-05 09:30:29 Global Times
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Graphics: GT

Lenovo calls on China's telecoms

In less than a month, Lenovo Group hired three new executives with experience working for China's telecom carriers. Analysts said the personnel changes demonstrate Lenovo's desire to revive its struggling mobile phone business, specifically by bolstering sales channels through the country's powerful telecom carriers. Still, expanded sales channels won't be enough for Lenovo to overtake its formidable competitors in the domestic smartphone market, analysts said. Perhaps aware of the challenge at home, Lenovo has achieved some success at increasing its market share overseas.

When Lenovo Group completed its acquisition of Motorola Mobility three years ago, its CEO Yang Yuanqing declared war on the world's top two smartphone makers, Apple and Samsung, but now it seems Yang has settled on a less ambitious goal of getting the company's mobile division to turn a profit.

According to Lenovo's latest financial statement, the company's global smartphone shipments fell 26 percent year-on-year the quarter ending December 31, 2016, when its mobile division took a 2 million operating loss.

Lenovo has been squeezed out the of the top-five ranking of the largest smartphone makers by shipments, both in China and around the world, according to data tracked by International Data Corp (IDC).

While Lenovo's mobile phone division has struggled, under Yang's leadership it has maintained its long-standing leadership in the personal computer segment.

In 2016, Lenovo's share of the personal computer market crept up to 21.3 percent from 20.8 percent of global shipments, according to IDC.

Some analysts have suggested that Lenovo should sell its struggling mobile division to focus on its personal computer business, but Yang has other ideas.

“Mobile should be our core business as well,” he told Reuters in mid-February, after the company's net profit fell 67 percent year-on-year in the last quarter of 2016.

Turning to the telecoms

After Lenovo reported its drop in profits, the company went on a hiring spree for its mobile division.

Over about a month, Lenovo brought in four new senior executives for the division. It hired Jiang Zhen, a former executive at Samsung Electronics Co, to head its mobile unit in China.

The other three executive it hired are former TCL China sales manager Zhu Han, former China Telecom terminal general manager Ma Daojie and former China Mobile executive Yu Gao.

Zhu was also a former China Telecom executive.

Lenovo has made a great effort to secure top talent in the industry for an elite management team. “Efforts and resources will be focused on the development of the Moto brand,” Yang said in a press release on March 6.

Of the four new executives, three had worked for China's telecom carriers, sparking speculation that Lenovo aims to revive the brand by bolstering sales through the telecoms' robust sales channels.

Although there has been a boom in online smartphone sales, many consumers continue to buy phones at China Mobile, China Telecom and China Unicom branches in the country.

China Mobile, the country's largest carrier, aims to sell more than 400 million 4G smartphones in 2017, Sha Yuejia, vice-president of the company, said at a meeting in December 2016.

In 2016, China Mobile sold 519 million 4G handsets in China, according to data from the China Academy of Information and Communications Technology.

Xiang Ligang, CEO of the industry information portal cctime.com, said Lenovo's phone sales will receive a big boost if the company gets a piece of the telecoms' sales, according to a report in the Securities Daily on March 22.

Insufficient strategy

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