Overseas expansion

On June 2, Lenovo announced it was buying a major stake of Medion, a German consumer electronics maker, for up to 456 million ($645 million), the biggest acquisition since it bought IBM's PC business in 2005. This deal would boost Lenovo's PC market share in Germany to 14 percent and in western Europe to 7.5 percent, taking Apple's fourth place in the market share of the region.

The acquisition was in line with Lenovo's global expansion ambition in developed overseas markets. Just five months ago, Lenovo announced it was forming a joint venture with NEC, with Lenovo taking a 51 percent ownership in the new venture, a move that enabled it to establish a firm foothold in the Japanese market.

The deal was an apparent challenge to Acer, which currently accounts for the lion's share of the European PC market. But other than a trophy to stroke the corporate ego, Jiang did not foresee much benefits.

"Lenovo is likely to witness a rise in revenue and market share in the short term, but it does not necessarily lead to a high profit margin and may even face deficits. While the previous bid for ThinkPad was about access to the US market, ample evidence shows the Asia-Pacific region remains the ultimate driving force," Jiang said.

The flurry of overseas acquisitions and joint ventures has brought back memories of the company's earlier problems of integration after its purchase of IBM's PC business.

After Lenovo took over IBM, Yang Yuanqing was appointed chairman of the board and William Amelio, who previously worked for Dell, was invited to be Lenovo's CEO. The move aimed to combine Yang's expertise in the domestic market with Amelio's overseas experience.

Related readings:  Lenovo's challenge: i can, too Lenovo buys into Medion to expand in Europe  Lenovo eyes more tablet market share  PC maker Lenovo says 2010 profit doubles

However, a corporate cultural conflict brought about by a foreign management style and local staff distracted Lenovo from making bold innovations and strategic shifts in the fast changing global economy.

The management reshuffle that followed Lenovo's worst performance in 2009 not only welcomed Liu back to the top job, but also led to the replacement of Amelio with Yang. The dream team of Liu and Yang brought an end to Lenovo's falling sales and boosted corporate morale that had suffered under the previous regime.

Lenovo also restored company confidence by developing a consistent corporate strategy.

"The company is now configured to be internationalized, from its employees, to its management style," Wang said.

Lenovo has overcome the traditional dichotomy of domestic and overseas markets, and is eyeing a new form of divide: developed markets and emerging markets.

"As for advanced economies, Lenovo has and will continue to proceed with mergers and acquisitions, especially in areas where market share remains limited. For emerging economies, all that matters is to tap into the market and make a strong presence," Wang said.