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Lenovo, NEC form largest PC group in Japan

Posted January 27, 2011

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— NEC and Lenovo, the world's No. 4 PC manufacturer, are joining forces to create the largest personal computer business in Japan.

NEC now has about a one-fifth share of Japan's PC market while Lenovo, the world's No. 4 PC maker, has about a 5 percent share.

"The new joint venture gives both Lenovo and NEC a unique opportunity to grow their commercial and consumer PC businesses in Japan, the third largest PC market in the world, through a stronger market position, enhanced product portfolios and expanded distribution channels," the companies said in a statement.

Lenovo, which bases most of its operations and does the majority of its business in China, will own 51 percent of the joint venture to be known as NEC Lenovo Group Japan. NEC Corp. will hold 49 percent.

As part of the deal, NEC will receive Lenovo shares worth $175 million.

“The agreement with NEC is a perfect fit for our strategy. It reinforces our commitment to our core PC business while, at the same time, providing important new opportunities for growth in Japan,” said Yang Yuanqing, Lenovo's chief executive officer. “We have a long history of innovation in Japan and a firm commitment to the Japanese market. Now, we are combining our global strength and momentum with NEC’s market leadership. It is the perfect partnership for us and for our customers.”

According to the Kyodo News service in Japan, the Lenovo-NEC deal represents "the first full-fledged alliance between major Japanese and Chinese players in the information technology industry."

The deal was announced just hours after Lenovo's chairman said Chinese businesses are looking to expand to the United States. Liu Chuanzhi, the founder of Lenovo, brought the Chinese-based company to the U.S. when it purchased IBM's PC division in 2005. Now, Liu says further investment from China could be headed to the country where Lenovo operates its headquarters.

“Lenovo is the right partner at the right time for NEC, and we believe that we are creating a strategic relationship today that will benefit NEC and our customers for many years to come," said Nobuhiro Endo, president of NEC. “We believe this alliance will further reinforce and expand our PC business in Japan, upholding the NEC brand name, and will continue to provide Japanese PC users with products supported by high quality and service. Taking this strategic relationship as a first step, NEC will accelerate expansion of our IT business worldwide.”

Lenovo already operates a major research and development lab in Yamato, Japan. Its headquarters is located in Morrisville.

The deal may also be the first of several between the two companies.

"As part of this strategic alignment, Lenovo and NEC have also agreed to discuss further cooperation in other areas, including selling PCs and providing global support to Japanese companies operating outside of Japan (JOCs); developing, producing, and selling devices such as tablets; and selling additional IT platform products such as servers," the companies said.

Japanese media have speculated that NEC would use a partnership with Lenovo to help expand its own business in China.

Hideyo Takasu, president of NEC Personal Products, will become president and CEO of the venture while Roderick Lappin, currently Lenovo Japan president, will serve as executive chairman.

The announcement came after NEC reported a wider net loss for the most recent quarter. Its net loss swelled to $323 million in the October-December quarter.

Media reports had speculated about a Lenovo-NEC business deal for the past week.

The Nikkei business daily in Japan, for example, reported late Tuesday, "NEC, Lenovo reach basic agreement on PC joint venture."

NEC is the No. 1 PC maker in Japan, but in recent years, it has largely withdrawn from global competition.

The combined effort is expected to produce PCs at an NEC factory in Japan.

10 Comments

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  • catchfinally Jan 28, 2011

    @Readme, I have a very good idea what I'm talking about. If you think I am a disgruntled employee you are very wrong, I'm quite content. But why don't you try selling you lenovo utopia propaganda to the widow and children of the man to took his own life after lenovo stripped him of his life's work of 25+ years with them and ibm, lenovo sent everything he built to China to be done cheaper. Oh yeah, great asset to the community you guys are.

  • SubwayScoundrel Jan 27, 2011

    Wow, very uninformed people on GOLO but what else is new. Lenovo has some of the brightest and best management around. Also, some of the best employees. And for those who no longer work there, sorry for that. Like most large employers, you have to contribute to stay. No just hanging around allowed.

    RTP was lucky to have the IBM PC company here and lucky to have Lenovo. If only the avg citizen or Goloer knew the work being done there, they would understand.

    Also, Japan has always led in these mergers as this is not the first one. Just smart business

  • krinkn Jan 27, 2011

    Readme, I agree. I'm a current employee and I find it a very nice place to work: projects are interesting, people are nice on all sides of the globe, pay is good, benefits are good.I'm not a manager, just a worker bee. I can't complain.

  • Reader X Jan 27, 2011

    I must admit that my experience with Lenovo was not a good one either. I was treated very unfair and was part of a large group that was outsourced to Brazil. I would never want to work for that company again. I do hope they have started changing their ways for all my other friends that still work there. I know they are not the happiest either.

  • readme Jan 27, 2011

    catchfinally, you have no idea what you are talking about. You are a troll and a disgruntled former employee. I can also speak from experience and say there are many employees at Lenovo that have a spine and job satisfaction. I will further stipulate that the senior management (of which I am not a member) does not hate America or any other country. They are professional business people and deserve some respect for what they have contributed to local employees and the economy. I'll go even further and say that Lenovo probably saved U.S. jobs even when considering the cuts that took place. That PC division at IBM was a sinking ship. Lenovo has turned things around.

  • scot30 Jan 27, 2011

    "Just freakin great. More jobs going overseas." - Dark of the Moon

    You have no clue what you're talking about. There are no jobs going anywhere because of this, and in fact this deal has absolutely nothing to do with the United States. The only reason this story is on here is because Lenovo has a major presence out at RTP. NEC doesn't sell PC's here, and hasn't done so in quite a few years now. If anyone will lose jobs, my guess is it will be at NEC in Japan. Lenovo will probably start making all or most of the PC's for NEC and slap NEC's name on them...right before they finish taking over the other 49% of the "joint venture."

  • catchfinally Jan 27, 2011

    Lenovo is a commie corporation that hates America and treats their employees like feculence (the only word golo allows in this case). The majority of their American employee base are an uncaring group of perceived good doers who would throw their mates under a bus for any reason. Any of their employees who actually had a backbone were laid off long ago. I speak from experience.

  • sap0953 Jan 27, 2011

    What was it that Obama said the other night "MADE IN AMERICA"! Come on...bring the jobs back to the USA!

  • LambeauSouth Jan 27, 2011

    NEC is the No. 1 PC maker in Japan
    WHAT PART OF THIS DON'T YOU QUITE UNDERSTAND
    NEC IS ALREADY IN JAPAN

    JEEZ READING COMPHRENSION SHOULD BE REQUIRED PRIOR TO COMMENTING!

  • Dark of the Moon Jan 27, 2011

    "he combined effort is expected to produce PCs at an NEC factory in Japan."

    Just freakin great. More jobs going overseas.

    HELLO MR PRESIDENT. ERRR....CAN YOU DO SOMETHING TO MAKE COMPANIES WANT TO ACTUALLY CREATE JOBS IN AMERICA? YOU KNOW, THE COUNTRY YOU DO NOT SEEM TO LIKE VERY MUCH.