Lenovo reorganizes Brazil operation

The company is "adapting costs to a new market reality"

Lenovo has reorganized its operations in Brazil as part of a plan to reduce spending.

The Chinese company has swapped a manufacturing facility of 52,000 square meters in the São Paulo state city of Itu for a facility that is half the size in Indaiatuba, also in the São Paulo countryside.

The workforce has also been reduced from 5,000 staff in Brazil to 800 employees, according to Brazilian newspaper Valor. According to the company, this was necessary to "adapt costs to a new market reality."

"The upside is that the market has remained at about the same size for the last three quarters and we believe that the decline is over," Lenovo Brazil's president of the computer division, Silvio Stagni, told Valor.

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"Everyone has been hurt [by the recession] and has been adopting a conservative purchasing behavior, but despite the crisis we have seen over the last few years it is only a matter of time until the country gets back to being one of the top markets in the world for electronic items," the executive added.

About 90 percent of Lenovo items sold in Brazil are produced in the company's facility in Indaiatuba, which has capacity for manufacturing 1 million items yearly. More expensive items such as notebook Yoga 910 are imported from China and the United States.

The Chinese manufacturer currently ranks third in the Brazilian PC market with market share of 13 percent, behind Dell and HP.

Back in 2012, Lenovo bought Brazilian consumer electronics firm CCE to increase its market share in the country. Before buying CCE, the Chinese firm courted other local manufacturers, such as Itautec and Positivo.

Lenovo then sold CCE back to its original owners for an undisclosed sum last year. The company said it had decided to focus on "value-added products", such as its smartphone business and its premium range of PCs and servers.

According to IDC, the Brazilian market for PC sales has seen a new low in the third quarter of 2016, with a 35 percent decline in relation to the same period a year ago and 11 percent down on the second quarter. The analyst has no forecast for improvement in the coming months.

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