There are many struggles that a company in China faces in order to become global. Being a little company in a “hierarchical society that often makes it difficult to practice Western management theories of empowerment and delegation” (Moran, Harris, Moran, p. 332) can be a huge feat to overcome and that is what Lenovo did. Lenovo did really well in its home country of China but when it tried to go global it ran into some hiccups. It all came together when Lenovo bought IBM in 2005 and eight years later becomes a fortune 500 company.
In order for Lenovo to become a global company they had to choose a leader that understood personal development, growth, and monetary rewards (Moran, et. al. p. 333) to entice employees and ensure they stick around. Once Lenovo had a grip on the small business portion they began to work on negotiations. In their negotiations they decided they wanted to go global, they bought IBMs corporate PC business division (“From guard shack to global giant”, 2013). From the economist an article was posted on how Lenovo became such a large company with all of the pitfalls and issues it endured. Bringing the Chinese culture to the United States was tricky and figuring out what works took some trial and error and it almost ruined the company trying to implement a strict culture into an American workforce.
Cultural differences made it trickier. IBMers chafed at Chinese practices such as mandatory exercise breaks and public shaming of latecomers to meetings. Chinese staff, said a Lenovo executive at the time, marvelled that: “Americans like to talk; Chinese people like to listen. At first we wondered why they kept talking when they had nothing to say.” Two Western chief executives failed to turn things around. By 2008, as the financial crisis raged, Lenovo was bleeding red ink. (“From guard shack to global giant”, 2013).
Lenovo then appointed a new leader, Yang Yuanqin, and started cleaning house. Yuanqin made changes in the company that were not typical Chinese culture practices. Saving face was no longer something he was highly concerned about. Guiding the company into success was most important. After many changes Lenovo became a fortune 500 company and is quite successful. Understanding the Chinese culture may not work in America was a key component to their success. “Yang sought to integrate IBMs organizational culture and promote cross cultural teamwork (Moran et. al, p. 329)” which improved the overall business and created a synergy employees were happy to work in.
The company is in a race against Hewlett-Packard and is improving while Hewlett-Packard is declining. The image below shows Lenovo on the incline in the PC business.
As the company adapts to coming into the global market and overcoming some hiccups Lenovo is in line with the large companies we have all known for many years. Coming from a small business in China to a large global business with a presence in America can be hard but learning about what the workforce is like and how to work with the people are the key components to success.
Work Cited:
From guard shack to global giant. (2013, January 12). Retrieved March 31, 2015, from http://www.economist.com/news/business/21569398-how-did-lenovo-become-worlds-biggest-computer-company-guard-shack-global-giant
Moran, R., Harris, P., & Moran, S. (2011). Doing Business with Asians and Australians. In Managing cultural differences global leadership strategies for cross-cultural business success, eighth edition (8th ed.). New York, New York: Butterworth-Heinemann.
Worldwide Quarterly PC Tracker. (n.d.). Retrieved March 31, 2015, from http://www.idc.com/tracker/showproductinfo.jsp?prod_id=1
Peter Joseph Santiago says
Great article! Whenever a company is dealing with expansion into different cultures, it can be very challenging. In this case when a Chinese Company starts doing business in the United States, they must adapt to their new workforce. As leaders we must all understand that our biggest asset is our people. When you look around the room in any company, you’ll notice that there’s people from different cultures and backgrounds. What separates a good leader from every other individual in the room is their ability to adapt to the other persons needs in order to help that person to be successful. Now with different cultures we’ll find that different needs need to be met. As leaders we must understand what drives are people and understand the dynamics of the group. Every person will contribute a piece of the puzzle to the teams overall success. As a leader, we must learn to listen and find what piece of the puzzle each of our followers will contribute. In the Lenovo example, it would have been beneficial for the leader to worry less about how his team is different and instead worry on how he can use these differences to drive success with the team.
Michael Mccormick says
Your post has opened my eyes a bit the the cultural differences that make up China. I am currently conducting some research for my Thought Paper and in my findings China is on a completely different level than the United States or from most of the world for that matter. I am looking into the coal mining industry here in the United States and Globally, specifically safety issues. China has thousands of miners killed a year mining the coal that it needs, we as americans think that 20 to 30 miners killed a years is too many and we have one of the largest coal industries in the world.
The thought of changing there mentality is probably farcical and will only happen when companies like Lenovo start from the top with new thinking. The country has such a difference when it comes to management and company polices from what we are used to. But like you have said China is still cranking out large companies and producing most products. It will have to be a change within to change the ideals that are ingrained there.
Christopher Andrew Eubank says
I want to thank you for this blog, as I learned something important, even though I have worked closely with a few companies in your article. I had no idea Lenovo was a Chinese Company, and I have done business off and on with them for a while. I guess working with the domestic team I never thought to ask the question, nor did they have any Chinese members on project teams that I have done business with.
Secondly, I see your trends are form 2013 when HP was struggling mightily with it’s product profile. In 2010 our largest technology forward and reverse business by volume and footprint (international and domestic) when I was at UPS SCS was HP. Seeing the declines you show here follows the volume trends that we witnessed in the warehouse, as our revenue declined as volumes declined. On the other hand, our Lenovo business was picking up, especially in the personal laptop area (repair was growing significantly) and while it was not our largest piece of business, prior to my leaving the organization.
One item that I think would be interesting to study is why things evolved they way they did with the technology companies that you show, and what might be even more interesting, how the influence of the Chinese Government has affected Lenovo’s growth, if it has at all?
I mention the Chinese Government due to a recent experience with Chinese Manufacturing. I was working with a customer who has contracts with multiple Chinese manufacturers. When asking why his portfolio was so diverse, the customer answered it was driven by the government. Digging more, he let me know that this month, he may use one manufacture more because the Chinese government helps dictate which manufacturer has the ability (ie – workforce, access to raw materials) to service his business. I thought that was fascinating and need to do more research on the topic.
I like the cultural differences you outlines in your post. While I suffer from the disease myself, I think all American Businessmen and Businesswomen would benefit greatly from listening more and talking less. It’s hard to break cultural habit regardless of how hard I work at it!
Thanks for posting!