The consolidation of the Chinese computer giant Lenovo Group and the PC unit of the US behemoth IBM took its first step, as executives from both companies revealed their strategies for the Chinese market Wednesday.

Liu Jun, would-be co-chief operating officer (COO) of Lenovo Group, said Wednesday that his company would adopt a matrix structure in its management with two operations - Lenovo China and Lenovo International.

The biggest Chinese computer maker acquired IBM's PC business on December 18. Liu said the US Government is still reviewing the deal and it is expected to make a decision in late March.

According to the organizational structure of the new Lenovo, IBM Executive Steve Ward will act as group CEO.

Lenovo China will be the operation center in China, the global research management centre, and a global procurement center.

Liu is scheduled to be head of Lenovo China and Fran O'Sullivan, former general manager of IBM's PC Division, will be another co-COO in charge of Lenovo International.

In China, Lenovo China and Lenovo International will co-exist for a period of time in the transition but with enhanced co-operation in bidding customers.

Janet Ang, general manager of IBM China's PC business, will take the post of IBM International's general manager for China operations.

She said her team had started a round of visits to major IBM PC customers in the country after the Lunar New Year on February 9 to maintain their confidence and loyalty.

Liu said one of the first things the new company will do is ensure that Lenovo China and International combine components to cut costs and increase their bargaining power with suppliers.

Lenovo will also move some production of its notebooks to International Information Product Co Ltd, the most important production base of IBM in the Asia Pacific region.

At the same time, some of IBM's ThinkCentre desktop computers will also be made in Lenovo's production base in China to cut costs.

IBM's notebook development center in Japan, which develops its ThinkPad computers, will also design notebook products for the Lenovo brand.

Liu said Lenovo China would follow the existing strategy and maintain a stable growth for the Chinese market.

A new strategy for Lenovo China this year is to use the opportunity of the merger between Lenovo Group and IBM's PC business.

"In the notebook business, we will achieve rapid growth this year," said Liu.

Lenovo China will focus on big industrial customers, the notebook market, and rural markets at country and town levels.

Liu said his company is one of the few companies which bring its products to counties and towns nationwide, while some major competitors only penetrate city-level markets.

Lenovo released computers as cheap as 2,999 yuan (US$362) last year in rural regions. Liu said the move has stimulated demand from those areas and his company should further tap into this demand with tailored products and services.

(China Daily February 24, 2005)