What happened to the myth of companies who just wanted 1% of the market share in China? This is certainly 1 point to prove that doing business in China isnt easy at all especially in the crowded mobile phone business. Foreign firms dominate at the high-end of the market with advanced models, and also have the scale to offer low prices at the market entry-level, leaving the 80 or more licensed domestic manufacturers to slug it out in the mid-range.
Lenovo sold their mobile phone arm for $100 millon after a disastrous quarter in which sales fell 31%. Even with 6% market share, Lenovo Mobile had made a loss of 133.7 million yuan in the year ended December 31, 2007, compared with 426 million yuan profit in 2006 thanks to a sharp 31% drop in sales in the last quarter. Tough business aint it?
I think it is a strategic wise decision to withdraw from a low profit competitive market to concentrate on High profit PC business.
Definitely a wise move for lenovo after all mobile is not the core and its best for them to focus on their main pc business.
Pc is equally a tough business with razor thin margin too but the bottom line is to focus on what a company do best and for lenovo pc is the bread and butter.
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