Picture This, September 2013 — The China trade



Back to September 2013  issue

The China trade

The world’s largest computer manufacturer is based there but — in a reversal of roles — makes some here.
 
A “Whitsett, North Carolina” sticker — showing an outline of the state, its flag, the Lenovo logo and the words “Global Innovation, Working in America” — brands each box that leaves the factory. What makes this “Made in America” marketing strategy unique is that, first of all, personal computers are being built in the U.S. and, second, that Lenovo Group Ltd. is based in China, where most such manufacturing was sent years ago. While Cupertino, Calif.-based Apple Inc. and Mountain View, Calif.-based Google Inc. have plans for limited domestic manufacturing, their Chinese competitor beat them to the punch, opening in January a production line in Whitsett, where 115 employees make Think desktops and laptops for the U.S. and Canadian markets. Lenovo plans to assemble “several hundred thousand units” in its first year, says Jay Parker, president of the company’s North America operations.

The plant is a $2 million, 40,000-square-foot expansion of Lenovo’s $10 million, 200,000-square-foot fulfillment center, which was built in 2008 and employs 185 in logistics, computer refurbishment and services such as adding custom logos to laptop cases. The cost difference between domestic and offshore manufacturing has narrowed because labor and shipping costs are rapidly rising in China. Having a factory in the U.S. also means products get to customers quicker. It’s part of Lenovo’s “global-local” strategy, in which components are sourced worldwide but computers are assembled, tested and packaged close to end-users. That approach has helped the company grow in this country and globally.

When Lenovo entered the North American market in 2005 by acquiring Armonk, N.Y.-based IBM Corp.’s personal-computer division, most sales were commercial. But its retail business has doubled each of the past four years, Parker says, and Lenovo products can now be found in 6,000 North American stores. In July, two market-research companies reported that Lenovo had overtaken Palo Alto, Calif.-based Hewlett-Packard Co. as the world’s largest personal-computer manufacturer, with 17% of the market. The company has customers in 160 countries, and more than half of its $34 billion of revenue is generated outside China. Signs announcing Lenovo’s top spot greet visitors to its North America headquarters in Morrisville, where it employs more than 2,200.

The Whitsett plant, between Greensboro and Burlington, is just one of the company’s recent North Carolina projects. In May, it moved its North America Internet and telemarketing customer-service center from Bangalore, India, to Raleigh, bringing 100 jobs. Customer satisfaction was up 25% in the 30 days after its opening. And if North America sales continue to rise, more lines and jobs will be added in Whitsett. Tablet production has begun, and servers will be assembled by year-end. “If we continue to grow at the rate we have, we’ll look to expand it,” Parker says. “We’d love to do that.”
— Vikki Broughton Hodges