Lenovo eyes Brazil acquisitions, proposes local PC building base

Lenovo eyes Brazil acquisitions, proposes local PC building base

Summary: Lenovo is looking to acquire companies in Brazil and hire employees for a new PC manufacturing base in order to bring PCs and tablets to one of its priority emerging markets.

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TOPICS: Lenovo
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Lenovo, the world's second largest PC maker, is looking to acquire, hire, and further its branch out to Brazil.

Lenovo's Asia-Pacific and Latin America president, Milko Van Duijl, told Dow Jones in an interview that the PC maker is looking to set up a permanent shop in Brazil in a bid to lower import costs and produce PCs locally. The move could see thousands of local workers employed by the company.

Van Duijl said in regards to acquisitions: "We are interested in buying or working with all the players, though we are not singling out any one of them."

It makes sense. If Lenovo wants to build PCs for the Brazilian consumer market, it cuts out the import fees, it raises the economic hopes in the region by employing a ton of local workers. In local acquisitions, it will have the components ready down the road so it cuts out the need to import products and the company avoids heavy taxes.

Lenovo then fires out PC building at an incredible rate to aggressively target a developing and emerging market. It's cheaper overall for Lenovo, it aids the local economy, and the company could generate vast profits in Brazil should its strategy-in-theory plays out in practice.

The PC maker has a "protect and attack" strategy. It sees the company protecting its market share in the mature markets --- such as the U.S., Japan, and Europe --- while pushing for an entry route into BRIC countries --- namely Brazil, Russia, India and China.

But Lenovo has seen slow growth in China and India --- the two largest populated economies in the world --- while Europe, the Middle East, and Asia (EMEA) have performed better than expected.

In areas such as Argentina, Mexico, Indonesia and other Latin American countries, consumer demand is expected to rise as PC sales build from the ground up. In many regions, many consumers have yet to buy their first PC.

Only second to HP, Lenovo has seen the strongest growth among the top five vendors with a more than 28 percent bump, according to Gartner statistics. Lenovo has a 30 percent share in its native China with more than 30 percent market share.

In Brazil, however, it has a way to catch up with only a market share of 3.6 percent, pegging the company in ninth place.

IDC said it will see BRIC countries will see growth at a double-digit rate. In Brazil specifically, it will see IT spending up by 9 percent in 2013, while comparatively, European IT spending will rise by only 3 percent.

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Topic: Lenovo

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  • Good luck to Lenovo

    A few other tech manufacturing companies have flirted with Brazil to avoid Brazil's exorbitant import tariffs. Many have failed, for a variety of reasons. Even, the contract manufacturing companies have had a hard go of it.
    Your Non Advocate