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Lenovo Computers had undergone major changes and adaptations throughout its history, and the men and women behind it could be considered the best in the country for turning a small distributorship to the largest PC manufacturer in China. One of them is Danny Lui, founder and owner of Authosis Ventures, a venture capital firm focused on investing in information technology, software, internet, e-commerce, wireless and mobile solutions, and IC startups in Silicon Valley and China.
Lui started his run in the business world with a few years of corporate experience (writing business software applications for several British firms) and a $50,000 loan from a financial company. After two years in London, Lui decided to return to Hong Kong after seeing an opportunity in the stagnant computer market in China in 1981. Two years later, his company received a huge break after winning distributorship rights from IBM computers.
Lui and his company competed with several established Japanese and American multinational firms in a bid to becoming the sole distributor of IBM computers in the country. But their young, passionate and energetic nature caught the eyes of IBM's big bosses, which helped them secure the future of their organization.
"We were competing with big firms in the US and multinationals in Japan, but we were one, in the globe, that was a young team," Lui said. "I was the oldest, I think at the time I was 26."
"But they liked it, because they looked at it and they saw that we were more aggressive, we liked what we were doing, and it was our passion, so they picked us as one of them," he added.
The company expanded fairly quickly after winning the IBM distributorship in China. They put up multiple offices in Hong Kong and the Chinese mainland, and grew the workforce base close to a hundred employees.
But the market started its downhill battle in 1985 after the Chinese government initiated a conservative approach to their foreign exchange spending. Those who could afford left the market, even the industry altogether. However, Danny Lui stayed, simply because computers were the only thing that he knew about.
"There was only my job, you know, I could not say I'd shut down the company and do something else," he said. "It was the only thing I knew, computers."
"So we hung on, and gradually, with a lot of people leaving, we were able to absorb more and more market share, and the market started to come back in '87, then we became one of the leading distribution companies in China at the time."
During this period, Danny Lui met Liu Chuanzhi who would eventually be his partner and chairman of Lenovo Computers. Liu's web of relationships brought Lui and his company in connection with the Chinese Academy of Science which would prove valuable to Lenovo's success as a global PC manufacturer.
Their partnership moved Lui's distribution firm to new heights. They began selling computers embedded with Chinese language cards, manufactured by Liu's company, to local customers and multinational firms. A few months on, Lenovo was re-structured leaving the founding members with 40 per cent of the shares and the Chinese Academy of Science owning 60 per cent.
With a handful of great engineering minds and expertise in the field of computers, Lenovo began manufaturing display cards and motherboards eventually becoming one the largest manufacturers of such in China, all the while maintaining their distribution business. With the perfect combination of production and marketing, they opened a worlwide distribution channel to reach the global market and establish an overseas demand for their products.
In 1994, Lenovo was brought to public through the Hong Kong Stock Exchange. Three years later, they merged with their counterpart, the Beijing Legend Group, which doubled their market share and revenue in the former British territory. A few months later, Danny Lui left the business and moved to Silicon Valley to start in venture investment.
Lui's long-standing experience in the high-tech industry proved to be instrumental to his success as an ICT investor. And his knowledge about the Chinese market makes him an effective advisor to those who want to do business in the country.
"In China you really do develop a long-term relationship with customers. Once you have that then you gradually generate profit," he said. "If you jump in and say, "I'm the cheapest,"and they don't know you it's difficult."
"In China they're not in a rush to have the latest and greatest stuff, normally, until a price point that is acceptable, because China's average earnings are still low. Of course the coastal cities, you can sell Rolls Royce and Ferrari, but the inner cities, still income is very low, so you have to have a price point for it to take off," Lui said.
"For example, broadband. In the old days the card and the equipment are pretty expensive, then it wouldn't take off. But now it's very cheap, everyone at home has broadband access, ADSL and all that, and it's been ramping up very fast," he added.
To Lui, establishing a relationship with customers should be the primary objective of any company wanting to do business in China. He said that customer relations could spell how well a business would perform in the market. In a country of more than a billion, it is product loyalty and business longevity that are the true definitions of business success, and building awareness and trust could prove effective, exemplified by the long history and popularity of Lenovo Computers.
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