IBM-Lenovo Deal

Knowledge@Wharton takes a closer look at the deal in the context of two trends: “the increasing commoditization of technology and the emergence of Chinese companies as global players.” The article also looks at the view from China:

Within China, the deal has both its critics and its supporters. Fang Zingdong, chairman of and a well-know IT critic in Beijing, calls it “a magnificent acquisition The new Lenovo becomes a major global player in the PC industry overnight instead of struggling for generations.” Lenovo is getting “IBM’s first-rate products, technology, brands, market, channels and management,” he says.

Zeng Ming, professor of corporate governance and M&A at Cheung Kong Graduate School of Business in Beijing, is “cautiously optimistic” about the deal, saying it “symbolizes Lenovo’s efforts to strengthen its competence in the global market.” As for other industries in China that might benefit from such deal, he suggests that “it must be a mature, global industry where Chinese companies get the cost advantage and have no technical barriers.”

Wang Fanghua, professor of strategy and executive vice dean of the School of Management, Shanghai Jiao Tong University, sees these types of future deals in the high-tech, retail and automotive industries where Chinese companies have achieved a certain size and are well positioned to enter the global market.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.