March 11, 2008 / 8:48 AM / 12 years ago

China's Lenovo eyes emerging markets for investment

BEIJING, March 11 (Reuters) - Lenovo Group Ltd (0992.HK), the world’s No.4 computer maker, said on Tuesday it was focusing its overseas investment on emerging markets, where computer use was less prevalent, Chairman Yang Yuanqing told reporters on Tuesday.

“Our focus for investment is emerging markets such as India, Brazil, Mexico, the Middle East and Eastern Europe,” Yang said on the sidelines of China’s annual session of parliament.

“These regions have lower market penetration levels. And we have more experience than our competitors in these markets,” he said, without offering details about specific investments.

Yang was generally upbeat about his company’s prospects in 2008, but said operating costs could begin to rise due to higher raw material and labour costs.

“We are worried that rising inflation, currency appreciation, and higher labour costs will lead to rising cost pressures,” the executive said.

“However, all competitors are facing the same pressures.”

The company, which bought IBM’s (IBM.N) loss-making PC arm in 2005, is expected by analysts to fare better in 2008 than larger rivals Hewlett-Packard Co (HPQ.N), Dell DELL.O and Acer (2353.TW) because of its dominance in Asia, especially China.

Lenovo beat market expectations by tripling third-quarter earnings thanks to strong Asian demand, which could help insulate as the global industry faces a tough 2008 and a U.S. slowdown curbs technology spending.

Lenovo, which commands a third of the booming Chinese market and leads Asia in computer sales, is now targeting the fiercely fought, but unfamiliar American consumer arena even as fears mount of a sharp pullback in IT spending there.

“We are not dependent on the U.S. market,” Yang said.

The company also said it was still interested in listing on China’s domestic A-share market, but that its application was with regulators.

“We are still waiting on regulatory approval,” he said. “This is not something we can do whenever we decide to do it.”

China’s securities regulator warned listed companies in February against big equity market offerings, in a move to prop up stock indexes that have slumped by about a third in the past five months.

The regulator pledged a “strict” review of applications. ($=7.10 yuan) (Reporting by Kirby Chien; Editing by Anne Marie Roantree)

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