The Entrepreneur’s Bookshelf: The Lenovo Affair

We often read a lot about successful companies (for example: Dell, Google, Microsoft, MacDonald) and their best practices that turn them from good to great. With the emergence of China possibly as a new economic superpower within the next decade, our interests are geared towards the successful Chinese companies that had emerged over the past two decades. Chief among those, who made news by taking over of the IBM PC division, is Lenovo or 联想. “The Lenovo Affair” written by Lin Zhijun, translated by Martin Avery, described the rise of Lenovo and the main characters behind the company.

“Our goal is to get to the other side of the river. Everyone knows that. The hard part is knowing how to do it: do we build a bridge, or make a boat, or learn to swim. Since we don’t know to swim, jumping in the water will just whip up bubbles and create an amusing tragedy. Lianxiang doesn’t want thatt. Lianxiang wants to be a hero who can get things done.”
– Liu Chuanzhi

There are very few books written about the rising Chinese corporations. The main reason, I believe, is the language barrier. If you read “The Lenovo Affair”, you will find the style of language (even though it’s American English) very different from western books. The reason is that it is translated originally from a Chinese book. You will notice important chinese phrases that are well-known among the Chinese captured in the many passages of the book. No matter how it is written, my assessment is that the translator has done his best to capture the important lessons learnt from the people behind Lenovo (or Lianxiang, translated from Chinese in hanyu pinyin).

The book is divided into four parts in a chronological order:

1. The Rebels (1984-1989): This part describes mainly the founding of Lenovo: It started with how Liu Chuanzhi, a scientist from the Computer Institute of the Chinese Academy of Sciences founded the company along with eleven other scientists from the institute. After the company was formed, the book recounted the early struggles of the company to find ways and means to bend over the communist and bureaucratic government, the development of “Lianxiang-type Chinese character system” by Ni Guangnan, the chief engineer of the company, the founding of Lianxiang corporation in Hong Kong and how the company obtained the license to sell computers from IBM.
2. The Age of Leaders (1990-1994): This section focuses on the stiff competition from rivals faced by Lenovo. The book describes the power struggle between Liu Chuanzhi and Ni Guangnan, the problems faced by the company in sales and how they adopted the Hewlett-Packard business model to revive the fortunes of the company. It also features Yang Yuanqing, the current chairman of Lenovo.
3. The Age of the Market (1995-1999): This part of the book discusses the major events such as the consolidation of Beijing Lianxiang and Hong Kong Lianxiang into China Lianxiang, the investigation of Lenovo from the Chinese government due to the links in Hong Kong, the final showdown between Liu Chuanzhi and Ni Guangnan and the rise of Dell as a threat to Lenovo.
4. Change or Die (2000-2004): Finally, in the final chapters of the book, the story of Lenovo ends with the search for the successors to Liu Chuanzhi, splitting of the company into two parts for two possible successors, Yang Yuanqing and Guo Wei, the restructuring of the company and ends with the takeover of IBM PC in 2004. In some sense, this part of the book jumpstarts Lenovo’s global ambitions on the computer industry and describes the end of an era with the retirement of Liu Chuanzhi.

A few interesting lessons can be extracted from reading this book, particularly in the context of Singapore. First of all, Lenovo originated from a government research institute and it takes Liu Chuanzhi, a scientist to take the role of a businessman to convert the research into successful commercialization. One really wonders why Singapore did not end up creating Lenovo. Is it because visionaries like Liu Chuanzhi prefer to be a civil servant and not take the risk or the market is too small? I think that it’s a combination of both. The rivalry of Liu Chuanzhi and Ni Guangnan creates another food for thought. It is a technologist versus a business man scenario in technology companies and this is what leads to the downfall of many companies. A scientist in a corporation must understand that the survival and interests of the company are far important than his personal research interests. The last thing which made me enjoy this book, is how the difficulties that Lenovo faced in the initial stages of its creation and subsequently leading to her global ambition.

If you want to know more about this company and how Chinese corporations work, this book is perhaps a good primer to begin with.