Chinese manufacturer Lenovo is setting up a new company in China focused on low-cost smart devices.
Lenovo is lining up its new subsidiary to compete with relatively new firms such a Xiaomi, which produces mass-market smartphones for relatively low prices.
The new firm will bear a different brand name and market directly to consumers, echoing Xioami’s strategy. It is aiming to begin operations on April 1st, and will focus on software and app development as well as devices.
It is somewhat surprising that Lenovo is turning its attention back to the Chinese market, after CEO Yang Yuanqing stated in August that Lenovo would “prioritise profitable markets overseas rather than jostle with unidentified unhealthy rivals in China.”
Yang noted that “China is still one of the most important markets for Lenovo, but we actually have more potential opportunity outside of China.” At the end of Q2, Lenovo’s international shipments of smartphones represented almost 20% of total sales, compared to 5% just one year ago.
The group is currently in the process of acquiring Google’s Motorola Mobility for $2.91 billion. Yang has stated that the group will launch more innovative products once the takeover is completed.
In August, Lenovo confirmed that its sales figures for the quarter ending June 30th showed that it had sold more smartphones than PCs for the first time ever, with 15.8 million units representing an increase of 39%.
Lenovo was pushed into second place in the Chinese smartphone market in Q2 by Xiaomi, which now has a 14% market share compared to Lenovo’s 12%. However, Lenovo is the fourth largest smartphone player internationally with a 5.4% share, despite being more widely known for its PCs outside of China.