China’s Foreign Direct Investment:
Lenovo Group Limited
DR. ERIC STONE
EPPM 4433 Set No: 2 Groups: 4
Table of Contents
This objective of this assignment is to focus on the Foreign Direct Investment in the case of Lenovo Group Limited. There’re three objectives that will be concentrated.
1. To study the effect of foreign direct investment on economic growth. 2. To examine the benefit gained by Lenovo through Foreign direct investment. 3. To study the special risks faced by Lenovo through Foreign direct investment.
1.2. Field of research:
1.2.1 Background Lenovo
Furthermore, Lenovo Group Limited (Lenovo or “the company”) offers personal technology which includes products such as personal computers (PC), personal devices as well as services, applications and content. The company operates across the six continents. Lenovo is headquartered in Quarry Bay, Hong Kong and employed 27,000 people as of March 31, 2012. (line, 2013) Lenovo develops, manufactures and markets technology products and services. It is one of the leading providers of PCs.The group provides notebooks, desktops, workstations, servers, computer accessories and upgrades, mobile phones, computer software and services. (LudovicoRusso, 2013) It serves both enterprise and consumer markets. Lenovo has operations across Americas, Europe and Asia Pacific. Lenovo has organized its business operations under three geographic segments: China, mature markets and emerging markets (excluding China). The group's product segments include notebook computer, desktop computer, mobile internet and digital home (MIDH), other personal technology products and services and other goods and services. (LudovicoRusso, 2013) 1.2.2 Lenovo’s FDI
After Lenovo acquisition of IBM, the headquarters moved to New York which marks the association has taken an important step in the internationalization of the road. No days, Lenovo in 66 countries has offices and operations in 166 countries, with over 25,000 employees worldwide and an annual turnover of $14.6 billion, and has been established in Beijing, China, Tokyo, Japan and the United States Raleigh. In 1988 years Lenovo limitation implement an overseas development strategy planning, explore the way of doing business in foreign country, and define a best strategy to develop foreign direct investment. Consequently, they work out a strategy planning called “Trilogy” and “three development strategy”. 1.2.3 Trilogy:
i. The first step in the establishment of a trading company overseas, enter the international circulation, seeking to develop export-oriented products as a breakthrough. April 1988, Lenovo Computer Co, Ltd was established in Hong Kong, investment 900,000 Hong Kong dollars when it opened only three months to recover the full investment. ii. The second step, the establishment of a research and development center, production base, multinational company’s international distribution network. This is where the focus of the export-oriented career. iii. The third step, in 1993 in the overseas market, economies of scale, began among the list of countries of the computer industry.
1.2.4 Three development strategy:
i. The first is the "blind back lame" industrial development strategy. It means they choose to complete each other’s advantages. Lenovo Hong Kong have their own advantages by three companies formed a joint venture. Among them, the Hong Kong guide familiar with the local transport companies and European markets, has a long experience in overseas trade. Another Chinese technology transfer company can provide a solid legal guarantees and reliable sources of loans. Beijing Lenovo's advantage lies in its technical and personnel strength unmatched in Hong Kong. On the industrial structure at home and abroad, Lenovo also uses the complementary principle. Hong Kong is an international trade window, sensitive...
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