Even selling in China they have problems. Cell-phone makers TCL and Ningbo Bird have seen their share of the mainland market eroded by Nokia and Motorola.
Profit margins at telecom equipment makers Huawei Technologies and ZTE have dwindled away. BOE Technology Group, the country’s biggest maker of liquid-crystal displays used as screens for PCs and TVs wants a government bailout.
Anywhere you look the picture is not overly promising. Even Lenovo is struggling overseas.
Lenovo’s acquisition of IBM’s PC division in 2005 led to predictions that it would become one of the major players in markets outside China. Lenovo remains the leader in China but is falling behind big competitors abroad. It is betting on the Olympics to pull it to number three postion worldwide. Perhaps.
On April 19, Lenovo said it was firing 1,400 people, or about 5% of its global workforce, with most of the cuts coming out of Europe and the U.S. ‘We have more work to do,’ said Rory Read, president of Lenovo’s Americas group. ‘We have strong competitors out there.’
One of the problems is government interference. ‘Every local government wants to go into high tech,’ says Pranab Kumar Samar, an analyst in Hong Kong with Daiwa Institute of Research. But it means that logistical problems come into play and it is often not the right business decision even though it may be a right political decision.
This all sounds doom and gloom but it is not. It took the Japanese decades to work their way to global dominance. And they still have their problems.
What China has is a huge home base for future forays into overseas markets. It may happen a little later than was thought in the initial excitement.
‘There was a lot of excitement about Chinese technology companies’, says Frank Lee, an analyst with Deutsche Bank (DB), but Chinese policymakers ‘underestimated what it would take.’
Source: Business Week