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Lenovo to build factory in Brazil

posted Jul 19, 2012, 11:14 AM by Webmaster IMGroup   [ updated Jul 24, 2012, 6:31 PM ]
Dan Stone, new president of the Brazilian subsidiary of Lenovo: plan is to increase sales volume and reach the market leader in the country within three years

The Chinese company Lenovo, the second largest computer manufacturer in the world, behind Hewlett-Packard (HP) plans to invest $ 30 million to build a factory in Brazil. With the unit being installed in a condominium business 50 000 m2 in the city of Itu (SP), Lenovo will produce its equipment in the country, replacing the outsourced manufacturing agreements with Flextronics and kept Compal, specialized in manufacturing Custom electronics.

In the same place will be installed a distribution center and stock components of the company. The forecast is that the Lenovo factory into operation in January. In two years, the unit can reach 700 direct employees, and two thousand indirect jobs.

By bringing the production "into the house," the company intends to increase the speed of product delivery to customers and increase the number of models available in the country. The goal is to fill gaps in supply and have machines that meet various consumer profiles - advanced equipment for companies to PCs affordable for retail.

As a result, Lenovo plans to increase its sales volume and reach the leadership of the Brazilian market of computers. Today, Lenovo occupies the seventh position, the company said, attributing the data to the IDC. "Brazil is the only country in the BRIC [the bloc of countries formed by Brazil, Russia, India and China] which does not occupy this position. And we will achieve it," said Valor by phone, Dan Stone, executive Israeli who took command of the Brazilian subsidiary of Lenovo earlier this week.

Stone replaced the Chinese Xia Li, who spent two years in office. At 36, Stone came to Lenovo in 2007. Since early 2011, was primarily responsible for defining the overall strategy of the manufacturer. He said this experience will be an important component in the company's expansion plans. "Knowing well the company and its top executives, can play an important role in the definition of investment," he said. According to Stone, the strategy for Brazil has a horizon of two to three years to run.

The expansion in Brazil is an old plan of Lenovo. In 2008, the company even made a bid for Brazilian Positive largest domestic manufacturer of PCs, with a strong presence in retail and government sector. The deal was not completed, but later there were several rumors that he was back on the agenda. Stone declined to comment on Lenovo's acquisition strategy.

The interest in the country is related to the rapid market growth of PCs Brazil is currently the third largest computer market in the world, behind China and the United States. The estimate of the Fundacao Getulio Vargas in Sao Paulo (FGV-SP) is the number of machines operating in the country reaches a per capita ratio in 2017. He is currently a PC for two people. The main competitors are Positive, HP and Samsung.

According to Ricardo Pagani, director in charge of Lenovo's supply chain, manufacturing itself will have stronger impact in operation from 2013. Before the start of production, but the company has plans to increase the product line sold in Brazil.

Lenovo also plans to invest in research development in Brazil. The investment is a requirement of the Basic Productive Process (PPB), the federal government, which grants tax benefits to companies that manufacture their products in the country. According to Alfredo Benito Y Nicolau, chief financial officer of Lenovo, the goal is to apply at least $ 150 million in research over a period of five years. The funds will be used in the adaptation of existing models, creation of devices that meet the specific needs of the market and the country's share in global projects of the company.

Although the initial focus on computers, the Brazilian plant Lenovo can diversify their operations in a short time. In the medium term, the idea is to use the unit to assemble products such as tablets, smart phones and even televisions. Expansion into new areas is part of the strategy defined by the company as "defending and attacking." The plan, which Stone took part in both the drafting and adoption, foresees investments to protect the company's performance in the PC market, while Lenovo expands to other areas - in China, the company launched by a video game console.

In an interview with Valor earlier this year, chief executive of the company, Yang Yuanqing, justified the approach. "People have needs, but if they have enough money, will want to buy all kinds of equipment, or more than one," he said.

Lenovo, as it is known today began to take shape in 2005 when the Chinese Legend bought IBM's PC unit for U.S. $ 1.75 billion. Renamed Lenovo, the company took the fourth position in the world ranking of computer manufacturers, who belonged to IBM. Since then climbed positions and took second place. According to research firm Gartner, in the first quarter of 2012 the manufacturer had 13.1% of the global market. HP is the leader with 17.2%. In fiscal 2012, ended in May, Lenovo reported a total revenue of $ 29.6 billion, up 37% in 12 months.