BOOK
REVIEW Lenovo data do not
compute The Lenovo
Affair by Ling Zhijun
(translated by Martha
Avery)
Reviewed by Gary LaMoshi
Known in China as Lianxiang, Lenovo was a
mystery when it purchased IBM's personal-computer
(PC) division in 2004. Suspicion lingers that
Lenovo is a Chinese government front to steal
advanced technology and spy on the West. After
The Lenovo Affair, the company may be an
even bigger mystery to all but the most dedicated
students of business sinology.
The book is
a translation from the original Chinese text
written by People's Daily business reporter Ling
Zhijun. He reveals much more about China's views
of business and the Communist Party line on a host
of related subjects than about the world's No 3
computer maker. Rather than a straight
translation, a rewrite for Western audiences would
have been a better approach. Key
unanswered questions include
the relationship between Lenovo and the
government, which remains its controlling
shareholder, as well as practical questions about
company strategy, finances and reasons behind its
success.
The translation preserves the
original's collection of quaint, deeply meaningful
Chinese aphorisms, such as "he felt his way up the
vine to find the gourd" and "push the wave and
assist the billows". These aphorisms are set off
by quotation marks, perhaps to ensure that readers
won't mistake them for original banalities. That's
not to say Ling (or translator Martha
Avery) can't write. One passage that appears
without quote marks states that company vice
president Wang Xiaoyan "could slice through those
opposing her like splitting a piece of bamboo".
The book begins promisingly, with charming
color on the company's early days. Apple has
co-founder Steve Jobs' garage; Lianxiang's iconic
birthplace in October 1984 was a guard post in the
Computer Institute Compound of the Chinese Academy
of Sciences in Zhongguancun, northwest Beijing's
nascent version of Silicon Valley. Company
chairman Liu Chuanzhi and his family lived in a
nearby converted bicycle parking area behind
newspaper walls.
The company's first
wooden signboard, gold letters painted on a black
background, read "China Academy of Sciences
Computer Technology Research Institute New
Technology Development Company". The name
Lianxiang, which means "linked thinking", grew out
of the company's breakthrough product. The LX-80
Lianxiang Han Card of the mid-1980s used the
linked-thinking concept to ease the input of
Chinese characters. Ni Guangnan, developer of the
system, became the company's first superstar,
winning government honors for his work, bringing
acclaim as well as profits to Lianxiang.
From there, both the story of Ni and
The Lenovo Affair go badly astray. As sales
of the Han Card fell and Lianxiang moved
increasingly into commodity manufacturing, chief
engineer Ni clashed with chairman Liu. This
long-running dispute is detailed with speeches and
letters from company files, but the strategic
issues are hidden within the clash of
personalities and company factions. The story
highlights how much personalities matter in
Chinese business. In that respect, Chinese
companies are remarkably similar to Western ones,
and in their hagiography of the geniuses at the
top, Chinese business writers can closely resemble
too many of their Western counterparts.
The book is full of puff portraits of
company officials (but with little substance about
what they actually do) and military-style
metaphors Liu apparently favors to inspire the
troops. It's short on how Lianxiang grew its
business so that it could become the snake that
ate the elephant with the takeover of IBM-PC. That
momentous event occupies barely eight pages in the
text, and wire-service stories of the day of the
sale had more details and richer insights.
Much of the book is simply a year-by-year
review of Lenovo's business that fails to
differentiate between routine and strategically
significant actions. Perhaps some of these events,
such as various investigations for corruption,
made big news in China then, or Lianxiang found
innovative solutions to solve the difficulties
facing many companies as entrepreneurial instincts
evolved faster than government policy on issues
such as salaries or taxes. That may make them
worthy of inclusion in a Chinese edition, but
they're still of little interest beyond China.
The remarkable story of Lianxiang's growth
- in 1984, a Chinese PC company seemed as
far-fetched as a Chinese astronaut or Chinese
Disneyland - remains largely hidden. Much of the
dense text seems to be in code, which may or may
not be more accessible to Chinese than Western
readers.
Careful readers can decode fuzzy
outlines of that story. Ties to the Academy of
Sciences greased the way for Lianxiang to get
early working capital and contracts. More
significant, Lianxiang used government incentives
to expand to Hong Kong. Its partner in Hong Kong
was a Chinese government company chaired by Liu's
father that gave Lianxiang access to offshore
capital as well as contacts. In its first year of
operation, Lianxiang Hong Kong was the company's
top profit center, though it's not clear what the
Hong Kong branch did then.
These days,
it's hard to find a computer that's not assembled
in China, but China's top computer maker began
manufacturing in Hong Kong, using the English name
Legend. Lianxiang started producing motherboards
before assembling its own computers. Until the
mid-1990s, however, its main business was acting
as a reseller of AST computers and Hewlett-Packard
products. Lianxiang copied HP's
distributed-selling concept for its own products.
By 1996, Lianxiang became the No 1-selling
computer in China, with a 10% market share, and
moved production to the mainland. By 2000,
Lianxiang had a 30% home-market share. But its
government and business customers began to abandon
it in favor of Compaq (which would merge with HP
in 2002) and, especially, Dell. With growth
increasingly hard to achieve in China, Lenovo (the
name replaced Legend, too common to provide a
striking brand identity) agreed to a US$1.25
billion deal to buy IBM's PC business in 2004. The
deal trumped the 1987 call from the head of the
Chinese Academy of Sciences for Lianxiang to
become "the IBM of China". But Liu approved the
acquisition only after becoming convinced that his
company could turn a profit on the business that
was losing money for IBM.
It would be
great to have details on how this amazing tale
unfolded, but you won't find them in The Lenovo
Affair. Or perhaps you could find them if you
can excavate through all the trash and fluff
burying them. Too bad no one seems to have applied
Lianxiang - linked thinking - to this telling of
the company's story.
The Lenovo Affair:
The Growth of China's Computer Giant and Its
Takeover of IBM-PCby Ling Zhijun (translated
by Martha Avery). John Wiley & Sons (Asia):
Singapore, June 2006. ISBN 0-470-82193-0. Price:
US$24.95, 369 pages.
Gary
LaMoshi has worked as a broadcast producer and
print writer and editor in the US and Asia.
Longtime editor of investor rights advocate
eRaider.com, he's also a contributor to Slate and
Salon.com, and a counselor for Writing Camp
(www.writingcamp.net).
(Copyright 2006
Asia Times Online Ltd. All rights reserved. Please
contact us for information on sales, syndication and republishing
.)
translator Martha
Avery) can't write. One passage that appears
without quote marks states that company vice
president Wang Xiaoyan "could slice through those
opposing her like splitting a piece of bamboo".
