Rumor: Lenovo Looking to Close Shenzhen Factory [UPDATE: Lenovo Denies Rumors]

Photo: AP via The Hindu

Lenovo is the world’s second-biggest PC company (and it’s got its eyes on the number one spot), but even that sort of success may not insulate some of its line workers from downsizing if rumors first reported in Taiwanese media and now being repeated in Chinese tech media prove true. Although the source of these reports is not clear and they should thus be treated with extreme skepticism, word on the street is that Lenovo is looking to shut down a manufacturing plant in Shenzhen to save on labor costs, moving operations that had previously been in Shenzhen to Sichuan and Anhui.

When contacted for comment, a spokesman for Lenovo categorically denied the rumors:

While we typically don’t respond to rumors, I will tell you that we have no plans to close our manufacturing plant in Shenzhen. Our Shenzhen facility is a key part of our supply chain and we continue to be very proud of the work we do there, which includes the production of our renown ThinkPad laptops for our customers worldwide.

The rumored problem was that workers’ salaries are slightly higher in Shenzhen than they are even in highly developed cities like Shanghai. According to anonymous “suppliers” — again, take this with a grain of salt or three — an average Shanghai worker makes 1450 RMB/month ($230), whereas workers in Shenzhen make 1500 RMB ($238). Salaries in less-developed Sichuan and Anhui are even lower, and when multiplied by thousands of workers over months or years, Lenovo’s potential savings would not be insignificant.

The rumored move is also being explained in part as a reaction to a shift in the marketplace, where prefabricated desktop PCs are being increasingly replaced by laptops or by custom-built machines that Lenovo and other PC makers can’t profit from. Needless to say, laptop and tablet manufacturing requires different skills and equipment than desktop manufacturing, and a restructuring move could make sense given that some of Lenovo’s newer plants, like the recently-invested-in Wuhan base, are better equipped to handle manufacturing mobile devices.

[via Sina Tech]

This post was updated at 03:16 to include an official statement from Lenovo.