Book Review - The Lenovo Affair by Ling Zhijun
When Lenovo bought the IBM PC division, I think many Americans saw it as an ominous sign of increasing dominance by a foreign juggernaut. In reality, Lenovo has just as many problems as any other international firm. The story is laid out pretty well in the book The Lenovo Affair - The growth of China's computer giant and its takeover of IBM-PC by Ling Zhijun (translated by Martha Avery).
The book covers the history of Lenovo, or Lianxiang as it is known in China, and its founder Liu Chuanzhi. The history goes back to 1984 when a small group of people from the academy got permission to start a business enterprise. This is the first major mind-shift you'll undergo as you read the story, as the Chinese culture and government make for vastly different rules in the business world. During their formative years, there was a tight connection between the academy and the business, so much so that workers in both areas could go back and forth between the two groups, drawing salaries from both. While it may sound like the government backing would guarantee success, the reality is that you have far more expectations and political gamesmanship to account for. And if you fall out of favor with the ruling party, your demise is pretty much assured.
As the years unfolded, up to and through the internet bubble, Lenovo earned the reputation of a company having nine lives. On numerous occasions, personality issues could have torn the company apart (and nearly did). Supply and cost considerations, along with foreign competition, almost caused the company to go bankrupt a number of times. The same business forces at work in the West (profit margins, competition, labor costs, etc.) also affect Chinese companies. You realize that the mere fact of being a Chinese company with government support doesn't automatically pave the way to success. The chapter on the IBM purchase is almost dealt with as an after-thought in the book. There's not much ink devoted to that particular event, but the rest of the book does a good job in setting the stage for what something like that means to a company like Lenovo.
This isn't a particularly easy read for a westerner. My unfamiliarity with Chinese names made it hard to follow the cast of characters. I'm sure the translation factor also comes into play in terms of readability. But it's a book I'd recommend for a number of reasons. You'll see how China's communist, war-driven history flavors business strategy at all levels. Companies looking to operate in China will start to understand how the culture is so very much different than ours, and how ignoring that fact dooms you to failure before you even start. But most of all, you'll see that it *is* possible to compete with companies like Lenovo, because they are just as human and prone to misjudgements as any other business...