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China’s Lenovo to lay off 11 percent of work force, cut management pay
By Amarendra Bhushan for CEOWORLD Magazine Updated:January 8, 2009
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The Lenovo Group, China’s biggest personal-computer maker, will cut about 2,500 jobs, or 11 percent of its work force, amid a worldwide economic slump.
Chinese PC maker Lenovo expects savings of about $300 million in the fiscal year ending March 2010, it said Thursday. The company said it would book a charge of about $150 million this fiscal year.
Lenovo’s reorganization has planted three of the four BRIC (Brazil, Russia, India and China) countries, or emerging markets, in one single region while leaving out more mature markets such as Japan and ANZ, an analyst noted in a phone interview with ZDNet Asia Thursday.
Lenovo, which makes Thinkpad laptops, said it probably had a “material loss” for the three months ended Dec. 31 because of weaker demand for personal computers amid the slump. Shares of Lenovo will resume trading on Thursday in Hong Kong after they were suspended on Wednesday pending the announcement.
The world’s fourth-largest computer maker by shipments said in a statement that it will save $300 million by March 2010 by reducing the number of its employees world-wide by 2,500 during the first quarter of 2009, including a number of senior executives. Executive compensation will be reduced by between 30% and 50%, including bonuses and other incentive payments, in the coming year.
Lenovo has announced that it expects to reduce the number of its employees worldwide by 2,500 during the first quarter of 2009, approximately 11% of its total workforce. This includes management and executive positions. The company is also reducing expenses in support and staff functions, such as finance, human resources, and marketing.
Lenovo also plans to reduce executive compensation by 30-50%, including merit pay and long-term incentives, as well as any performance payments for the coming year.
As part of the restructuring, Lenovo is consolidating its China and Asia Pacific organizations, which are currently run as separate business units, into a single business unit – Asia Pacific and Russia (APR). The new organization will help the company reduce its operating expense and eliminate duplicative support and staff functions.
APR will be headed by Chen Shaopeng, currently senior vice president, and president, Greater China. David Miller, senior vice president and president, Asia Pacific, will remain with Lenovo for a transition period.
Lenovo also announced that the company is relocating its call center operations from Toronto to Morrisville, North Carolina, the company’s main site in North America. This move will enable Lenovo to better leverage its investment in real estate and facilities, and better serve its customers by bringing the call center team closer to its marketing and sales functions.
Additionally, Scott DiValerio, senior vice president and president, Americas, who has led the Americas Group sales organization for the past year, will be leaving the company. The Americas Group will now report to Rory Read, senior vice president, operations, as part of Lenovo’s streamlining efforts.
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