The Chinese electronics industry has been eyeing the smartphone market for some years, and several vendors are looking for a place in the international world. As the internal Chinese industry is poised for consolidation among its scores of (mainly low end) suppliers, several larger players aim to be survivors and to extend their reach in terms of geography and device range. Joining Huawei, ZTE and Ningbo Bird is Lenovo, which has bought back the cellphone business it sold last year as a springboard for a serious attack on the mobile world.
Lenovo, best known as a PC maker since it acquired IBM’s operations in this area, has been moving further into the mobile carrier base, via netbooks and several smartphones, mainly created for China Mobile. Now the firm is acquiring Lenovo Mobile Communication Technology for $200 million in cash and shares, from investors including a unit of Hony Capital, a private equity firm controlled by Lenovo’s parent Legend Holdings. Lenovo sold off its cellphone arm to Hony and others in January 2008, for $100 million.
It will enhance its renewed attack on the phone market with a partnership with China’s largest online retailer, Taobao, according to local reports. “The directors now consider that it is appropriate to move aggressively to capture the opportunity in the mobile internet business,” said Lenovo in a statement, especially as it expects the evolving MID category to carry higher margins than conventional PCs or handsets, at 10% or higher. Lenovo Mobile holds third place in the Chinese domestic market by unit shipments, but has focused mainly on the low end. Reintegration with the PC activities of Lenovo will accelerate its moves into the Chinese 3G segment and the international MID world.
Reuters reports that Lenovo Mobile has signed a partnership with Taobao to co-design midrange webphones that will come preloaded with Taobao applications, in particular a mobile shopping service integrated with the retailer’s massive online store. Taobao is owned by Alibaba Group, which is 40% owned by Yahoo. Alibaba also controls China’s largest ecommerce web site, Alibaba.com.