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Lenovo to axe 450 employees

By Wang Xing (China Daily)
Updated: 2009-02-26 07:53

Support staff manning its overseas business would bear the brunt of the new job cuts. Lenovo had last month said it was trimming its workforce by 11 percent and eliminating 2,500 positions.

Workers at a Lenovo facility in Beijing return from a lunch break. [Bloomberg News]

"Our business in China continues to be strong. However, that is not the case with our overseas business due to the financial crisis. Most of our global support functions have employees based in China," said Yang Yuanqing, chief executive, Lenovo, in a statement. He said the company hopes to trim the jobs by the end of next month.

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Lenovo said as the global economic slowdown has severely reduced the IT requirements of overseas firms, it decided to pay more attention to its home market, which accounted for 45 percent of the total revenue in the third quarter.

"Lenovo's sluggish performance in the US and Europe has largely been due to its failure to change its business model. The once-successful IBM PC unit is no longer a suitable fit in the present market environment," said Antonio Wang, computer research manager of research firm IDC.

He said Lenovo's successful business model in China should be the foundation for its expansion in foreign markets.

The company recently conducted a management overhaul by appointing Liu Chuanzhi, its founder, as the chairman of the board, and Yang Yuanqing as the new chief executive officer, replacing William Amelio, a former Dell executive.

These moves follow Lenovo's record net loss of $96.7 million in the third quarter ending December 31, its first after it acquired IBM's personal computer business in 2005.

China is the world's second largest PC market, accounting for 15 percent of the global pie, according to IDC. The research firm said China would become the world's largest PC market by 2011.