Lenovo worries congress – What’s a Chinese company to do?
In 2004 Lenovo successfully acquired IBM’s PC division. It was a landmark event. It made Lenovo the third biggest PC manufacturer in the world; it seemed to mark Chinese corporations’ entrance as real players on the world stage. However, as CNOOC and Haier’s failed acquisition attempts showed, Chinese companies had a long way to go before being accepted as equals abroad.
The recent decision by the US State Department to limit use of Lenovo made computers to non-classified areas, reported by the Associated Press, demonstrates how significant the obstacles are. Many US Congressmen simply don’t trust a company that has any connections to the Chinese government.
This is despite the fact that Lenovo, a publicly-listed company, has its executive headquarters in North Carolina and is owned by investors from around the world, including IBM, which still holds 18.9%. Legend, which is controlled by the Chinese government, has only a 28% share.
So what’s a Chinese company to do?
On this blog the crisis of trust facing Chinese companies has been discussed. In that post it was suggested Chinese companies need to distance themselves from “China Inc.” perceptions by internationalizing – by developing brands based on products and services rather than country of origin.
Lenovo is a company that seems to be taking some of the right steps – diversifying its interests, moving its headquarters to the US, continuing the IBM brand name post-acquisition. Clearly, however, more needs to be done.
Lenovo, and others, need to build trust. Trust requires mutual understanding. For this understanding to exist there must be continual and open two-way dialogue between a company, its stakeholders and its publics. Lenovo needs to start such conversations with the congressmen that fear China and ensure that this dialogue continues.
Another step might be to encourage the Chinese government to divest itself of ownership in the company. While no guarantee, this would go some way towards assuaging the concerns of the American congress and people.


