Lenovo to continue investing in Channel

Ivan Cheung
Vice President, Chief Operating Officer, Lenovo Asia Pacific, Regional General Manager, Lenovo Central, Asia Pacific

A 100% channel driven company and has the highest channel penetration in Asia Pacific market, Lenovo has acquired the top position in APAC market. In a chat with Ivan Cheung, Vice President, Chief Operating Officer, Lenovo Asia Pacific, Regional General Manager, Lenovo Central, Asia Pacific and Rahul Agarwal, MD and CEO, Lenovo India discuss about B & C class cities, channel profitability and company’s growth

Kindly brief us about Lenovo’s Channel penetration?
At APAC level (without China) 95% of our business comes from channel. In Asia Pacific our market share for PC is 72% which is actually the highest and 95% of this market share is through channel partners. We are highest in channel penetration and have 17,000 registered channel partners in Lenovo Partner portal. We are now number one in APAC. Channel is important for us.

In APAC, 95% of business comes from channel and five percent through direct. In India, our consumer and SMB business is 100% through channel. Our relationship business may be 70-30 or 75-25%. So, on a whole we are close 90% even for India. 

How are you targeting the emerging Tier 2 & 3 cities?
There are two ways to target these cities. First, the good old distribution wherein you go to T1 and then to the regional distributors and then they go to the smaller stores. There are about 20,000 PC stores in India as per GFK. We sell to 10,000 stores. We are expanding our distribution network and appointing more regional distributors. In last six months we have appointed 30 more regional distributors. 

Second, a lot of B & C class consumers are buying online. So, therefore we are making sure that we put those products which are preferred by these customers. 

Third, our exclusive retail network so that we can continue to expand. Every quarter we are opening 30-40 exclusive outlets and many of them are in B & C class cities. 

Lenovo is also investing multimillion dollar to enhance the channel experience especially the Lenovo Partner portal. We not just put information in it but for order, channel partner program, publish ability and training on IoT products etc can be managed in the partner portal. We are also trying to invest in AI in this because now we have over 17,000 channel partners in Asia Pacific. With the AI capability, it will be not that easy to have a tailor made experience for each individual partner. So that is why we are combining some AI or Big Data in the partner portal so that it can be more personalised. It is one thing that will come out in 12-18 months. 

Rahul Agarwal
MD and CEO, Lenovo India

How Lenovo will help channel to stay profitable? 
The way we are expanding our portfolio, Lenovo will keep playing every strong role in IoT devices, we are also coming up with new products like AR, VR, commercial IoT and think smart hub. So, channel will have more to sell from Lenovo. So what channel wants is wider portfolio and to work with a profitable vendor. Lenovo is the No. 1 vendor, almost the most profitable in PC business and we are widening our portfolio. We are making ourself future proof. So this is what our partner needs. 

What kind of growth you are witnessing presently?
If I look at last year, we look at PCs and Smart Devices which is PC and tablets, we grew by 44% and the market grew by 5%. We totally outgrew the market. If you want to do well in India, you have to have the right share in all the channels like etail, traditional distribution, our own exclusive retail, LFR, institutional selling  etc.  So for the first time, in last quarter over 20% share in all the segments. In tablet we have over 30%, consumer is 22%, SMB is 20.1% and in enterprise it is 22%. So, we have to press all the levers because this is a market there are only three players which means that till the time we get 25% share we will not be happy. Today, we are about 4% away from 25%.