Soon, our products sold in India will be made in India: Yang Yuanqing, Chairman, Lenovo
New Delhi: At a time when global personal computer market is in sharp decline, Lenovo, the $46- billion hardware major, believes India will be the growth engine for its computers. The company also sees a huge potential in smartphone business in the country, where it claims it will be the number two seller soon. Yang Yuanqing, chairman of Lenovo, says the company will increase investments in India, add more people even as it looks at more than doubling business in India from $2.5 billion to $6 billion in three years. In an exclusive interview with ET, Yang talks about his meeting with Prime Minister Narendra Modi, growth in India, and much more.
How was the meeting with Prime Minister Narendra Modi?
Very good. I was very encouraged by his vision. We talked about digitalisation, mobility, connectivity. The PM's vision is to spread e-governance via mobile and low cost delivery of education. He is asking if we can develop phones where we partner with the content creators.
So can Lenovo meet the PM's vision?
We will do smarter connectivity and that is our innovation direction. It's 100% consistent with what the PM talked. We discussed five aspects to smarter connectivity. The first is connectivity between device and people. In future you won't need a keyboard or even touch interface, but natural language interface with devices.
Second is smarter connectivity between device and the network — devices can choose the network which is either the fastest or cheapest, so you are always on. That's smart connectivity.
Third is connectivity between people and personal data. For example, no matter where you take the picture or video, you can easily get that on each device — phone, personal computer (PC), TV. That is by leveraging cloud technology.
The fourth is how to connect people with applications. PM Modi wants to connect people with all kinds of apps. People should be able to talk to their smartphones — example, I want to book a ticket to Beijing, I should be able to talk to the phone.
And finally, PM talked about improving connectivity to enable telemedicine, education. We will work on that to connect people with these applications — education, healthcare, food, tickets.
Are you making fresh investments in India?
Sure. I don't have exact numbers. But let me give you some data to indicate where investments will go. Three years ago, we had about $600 million revenue from India. This year, we will close at $2.5 billion and now we have a plan to double this. In fact, our India country head says we will have $6 billion revenue in India in three years. So we will invest in manufacturing, R&D, market expansion.
India will be 50 million personal computer market in 10 years. At present, it is 10 million PCs and 100 million smartphones. I don't think users will be satisfied with just one device. People will have at least two devices — smartphone and PC — and that will drive growth for PCs.
Isn't the smartphone enough. How is it in other markets?
China has similar population and 60 million PCs, US has much less population than either India or China and is a 70 million PC market. India is 10 million PC market. That just does not match. With high GDP growth projected, more middle class will buy multiple devices.
We will invest in manufacturing. We make all PCs in Pondicherry and recently announced a smartphone factory in Chennai. In future, all products sold in India will be made in India. If possible we will export to other markets as well. In India labour costs are comparable with those in China. This is right time for us to invest in India.
In the cloud era, data centres are very important. Lenovo had a reselling partnership with EMC for storage and it has now been bought by Dell. How will that impact Lenovo?
That's good for us because Dell has bought an older technology. Meanwhile, a new company has been pushed to our side. That is Nutanix and it's the best example because of the hyper convergence trend. You could put server, storage and the networking in the same box and use software to define computing. That's the trend and Nutanix (Lenovo entered into partnership with it early in November) is the leading company in this area.
We have seen larger smartphone players Sony, Samsung struggling globally, and have made India their priority. Will India be the engine of growth for Lenovo as well?
Sure. China once accounted for one third of the global smartphone market. It is less than 30% now. India is growing fast and is a major contributor to global smartphone growth. It is single digit growth globally. But India and other emerging markets are the key contributors. That's why we focus here. We have our unique advantage compared to other brands, as we are more efficient. And compared to other Chinese players we are more international and more innovative.
What's the strategy to scale from $2.5 billion to $6 billion? PC market is shrinking globally and so is the tablet market. So, how do you plan to achieve this?
In India, PC is not shrinking and tablet is canablised by phablet and devices like two-in-one convertible PC. Smartphone and PC are still necessary for most people. Even if the total market is shrinking, Lenovo is growing that market in India.
In the last quarter India was a significant contributor to Lenovo's performance (India helped boost revenue by 16%)? Do you see India contributing more in future?
Lenovo is very good in emerging markets as there are lot of similarities with China, not just in PC but smartphones as well. Now we have 10% marketshare in India in smartphone and we are number three by revenue and number four by volume. Very soon we will be number two. We have 20% plus market share in Brazil and Russia. We are growing fast in Asean countries. Emerging markets will be our priority.
PM has lot of focus on improving `ease of doing business'? What has been your experience in India?
We don't face any hurdle anywhere. With the new government lot of things are actually becoming easier. Wherever we do business we comply with the regulation.
The reality is that India is a country with lot of processes. But we are not new to India. We are used to working with the government. We are seeing things change. For instance, manufacturing in India is beneficial now. We get very good advantage in India and very fast clearances.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.