Analyst Roundtable –
Protect Strengths, Attack Opportunities
Chen Shaopeng
President, Emerging Markets Group
Senior Vice President, Lenovo Group
Hong Kong | November 26, 2009
© 2009 Lenovo
Lenovo Global Presence
Global Headquarters
Sales 全球总部
& Marketing Centers
R&D Centers
营销中心
Global研发中心
Operations
Manufacturing
Centers
全球分支机构
制造中心
Mature Market Group
Emerging Market Group
US, Canada, Japan, Western
Europe, ANZ, Israel
China, Hong Kong, Taiwan, South Korea, ASEAN, India,
Turkey, Eastern Europe, Middle East, Pakistan, Egypt,
Africa, Russia, CIS, Mexico, Latin America
Analyst Roundtable | © 2009 Lenovo
Page 2 of 19
Lenovo Corporate Strategy
Analyst Roundtable | © 2009 Lenovo
Page 3 of 19
Winning in the Future No. 1 PC Market
WW PC Market Size Forecast (Units Mil)
FY09/10 Q2 China PC Market Share
NO.
1
29.4%
18.4%
8.7%
7.2%
26.6%
2007
2008
2009
2010
2011
2012
2013
Lenovo
HP
Dell
Founder
ASUS
Acer
Others
5.8%
4.0%
USA
China
Source: IDC PC WW Tracker CY09Q1
• China is forecasted to exceed US as the No. 1 PC market
• Lenovo has secured the No. 1 position in China for 12 years consecutively
Analyst Roundtable | © 2009 Lenovo
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China PC Market Overview
Unit (’000)
YTY%
China PC Market Shipment Growth
16,000
14,000
12,000
28%
26%
28%
25% 24%
22%
20%
15%
10,000
30%
14%
8,000
China PC Market by Segment
(Q1-Q3 CY2009)
10%
10%
SMB
35%
Consumer
47%
6,000
4,000
0%
0%
2,000
-7%
0
-10%
07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3
Calendar
Quarter
Source: IDC, Nov 2009
Public
Sector
13%
Large
Enterprise
5%
• The second largest PC market today
– Expected to surpass the US by 2012
• Recovered from the economic slowdown
– Shipment increased 28% YTY in calendar Q3 2009
• Consumer and SMB segments account for >80% of the market
– Consumer notebook segment is the largest growth driver
Analyst Roundtable | © 2009 Lenovo
Page 5 of 19
China PC Market: Customer Segments
• Lenovo Transactional business targets at the 2 main growth segments:
Consumer and SMB
Unit (’000)
YTY%
Consumer
8,000
46%
7,000
40%
6,000
29%
5,000
32%
30%
30%
27%
26%
21%
4,000
12% 11%
10%
2,000
4%
0%
1,000
-7%
-10%
07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 Calendar
Quarter
Unit (’000)
800
23%
600
400
300
4,000
29%
16%
20%
18%
14%
9%
4%
5%
5%
40%
31%
30%
26%
3,000
25%
-3%
-7%
0
-1%
2,000
8%
1,000
-9%
20%
10%
0%
-5%
-10%
0
-20%
07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 Calendar
Quarter
Unit (’000)
2,000
YTY%
20%
Public Sector
16%
16%
1,600
10%
10%
1,200
4%
4%
0%
0%
3%
2%
-1%
0%
0%
400
-10%
07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 Calendar
Source: IDC, Nov 2009
19%
14%
800
200
100
10%
50%
39%
36%
16%
700
500
YTY%
30%
Large Enterprise
YTY%
Small and Medium-sized Business
5,000
20%
3,000
0
50%
Unit (’000)
Quarter
0
-10%
07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 Calendar
Analyst Roundtable | © 2009 Lenovo
Quarter
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Pillars of Success in Lenovo China
Unique Business Model
z
z
z
Effective Channel Strategy
Best Customer Service
z
Extensive coverage
Industry leading channel management
z
Best in class service
z
− E-care. Call centers. Service stations
z
Great Product &
Successful Branding
People & Team
Dual Model: Transactional & Relationship
E2E business model
Speed & efficiency
12 years CCID award
z
Great products & coverage
Most well-known PC brand
z
Employer of choice
z
Analyst Roundtable | © 2009 Lenovo
Page 7 of 19
Dual Business Model: Go to Market Approach
Transactional Customers
(Consumer, SMB)
Sell Out
Retailers
RKA
Grid Sales
Sell
Through-In
Distributors
FA
Product Sales
Direct Sales
Tele / Web Sales
Promoters
Relationship Customers
(LE, Government, Education)
Business
Partners
Direct
Relationship
Sell In
ISR
Sales Rep
ISR
AE
Inside Sales Reps
Product, Grid, STF
Inside Sales Reps
Account Executives
Lenovo
Lenovo
Analyst Roundtable | © 2009 Lenovo
Notes:
FA - Fulfillment agent
LE - Large enterprises
RKA - Retail key account
STF - Store fronts
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Effective Channel Strategy
Most Extensive Coverage
• More than 13,000 sales points
• Over 6,500 Lenovo Exclusive Stores (LES)
• Covering 100% of all Tier 1 - 6 cities
Industry Leading Channel Management
• Daily monitoring of Sell-In / Sell-Out / Channel Inventory
– Average channel inventory turnover of 16 days
• Exclusivity of channels
– 80% sell Lenovo products only
• Strong credit and risk management
– Driving bad debt rate to a minimum
Analyst Roundtable | © 2009 Lenovo
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Lenovo Everywhere
Lenovo Storefronts
Lenovo Storefronts
Commercial Experience Centers
Demand Generation Event in Rural Market
Analyst Roundtable | © 2009 Lenovo
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Best Customer Service
Most Extensive Service Network
•
•
•
•
1,500+ service stations
100% coverage in Tier 1 – 5 cities
24x7 E-care service (350 million visits per month)
8,000 certified service professionals
– Including 3,000+ Lenovo engineers
• 800 phone lines handling average of 20,000 calls per day
Industry Recognition
• “Best Customer Service” award by CCID for 12 years
• Certified “COPC” call center 6 years running
• “HDI Level 4” certification (only 2 worldwide)
Analyst Roundtable | © 2009 Lenovo
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Great Products and Most Well-known PC Brand
%
100
Brand Total Awareness in China
100 98
DT
89
90
NB
ThinkPad T400s
79 78
80
73
70 70
70
65
62
60
56
60 61
59
57
50
40
40
30
IdeaCentre AIO B500
20
10
0
Lenovo
Lenovo
Dell
Sony
Toshiba
Founder
HP
Asus
TCL
Source: Millward Brown ACSR, Brand Tracker FY2008/09Q4
IdeaPad U350
Analyst Roundtable | © 2009 Lenovo
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Employer of Choice
• China Top 100 Employer Award 2006 & 2007
• Global Top 100 Employer Award 2006
• China University Graduates Best Employer Award
• 2003 - 2009
• Quality Employer Partner Award 2008
Note: CIMA – Chartered Institute of Management Accountants
Analyst Roundtable | © 2009 Lenovo
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EMG Half Moon Strategy:
Leverage China Best Practices
RUCIS
CHINA
EMAT
•
•
•
•
Unique Business Model
Effective Channel Strategy
Best Customer Service
Great Product & Successful
Branding
• People & Team
INDIA
ASEAN
HTK
Notes:
HTK: Hong Kong, Taiwan, Korea
EMAT: Eastern Europe, Middle East, Africa, Turkey
RUCIS: Russia, Commonwealth of Independent States (CIS)
Analyst Roundtable | © 2009 Lenovo
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Progress in Emerging Markets Group (EMG)
Market Share
18.0%
15.7%
15.0%
13.6%
16.2%
EMG
14.3%
12.9%
12.0%
9.0%
6.0%
5.3%
4.2%
4.1%
Q2
FY 08/09
Q3
FY08/09
3.6%
4.4%
Rest of EM
(ex. China)
3.0%
0.0%
Q4
FY08/09
Analyst Roundtable | © 2009 Lenovo
Q1
FY09/10
Q2
FY09/10
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Lenovo in India
FY2009/10 Q2
Market Size = 2,190K
Market YTY Growth = -3.1%
Lenovo YTY Growth = -7.5%
Lenovo’s Market Share in India
7.3%
7.8% 7.6%
Q1
Q2
6.6%
Q3
FY08/09
•
•
•
•
4.7% 5.0%
Q4
Q1
Q2
Opening of Lenovo Flagship Store in New Delhi
FY09/10
High brand awareness of 93%
Customer satisfaction score of over 90%
Introduce new products focusing on Consumer & SMB segments
Getting closer to consumers in India
– Increasing city coverage from 300 to 350 by end of 2009
– Grow current service center network from 140 to 250+ by end of 2009
– Penetrate deep into Tier 2 – 4 cities
Analyst Roundtable | © 2009 Lenovo
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Lenovo in Russia
FY2009/10 Q2
Market Size = 2,102K
Market YTY Growth = -31.6%
Lenovo YTY Growth = 133.2%
Lenovo’s Market Share in Russia
4.8%
0.9%
1.4%
1.9%
1.7%
2.7%
World longest ThinkPad banner in Moscow
Q1
Q2
FY08/09
Q3
Q4
Q1
Q2
FY09/10
• Seized new market growth areas like WiMAX mobile broadband
– First PC vendor to launch WiMAX enabled notebook
• Continue to grow channel network
• Introduced full range of Idea products for consumer
Analyst Roundtable | © 2009 Lenovo
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Summary
• Further expand leadership in China
–
–
–
–
Continue to leverage our unique dual model
Strengthen channel coverage
Expand product line-up to meet customer needs
Focus on sustainable profitability
• Drive growth in other Emerging Markets
– Replicate our strengths from China
– Focus on key countries
– Drive growth in shipments and expand market shares
Analyst Roundtable | © 2009 Lenovo
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IR Contacts (Hong Kong)
Gary Ng – garyng@lenovo.com / +852 2516-4840
Feon Lee – feonlee@lenovo.com / +852 2516-4843
Analyst Roundtable | © 2009 Lenovo
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