A woman of the world

When Lenovo, one of the most revered technology companies and the largest PC vendor in China, acquired IBM’s Personal Computing Division (PCD) in 2005, it made headlines worldwide. Here, after all, was a company relatively unknown outside its home market of China seeking to acquire Western assets in a bid to become a global player. Of course, China’s desire to expand in the Western market through mergers and acquisitions is not so unfamiliar now; other companies like Nanjing Automobile, which recently acquired some of the assets of MG Rover, have also jumped on the bandwagon. Lenovo, however, was among the first to make such a bold move, transforming it into the third largest PC manufacturer in the world.

Sitting in her office in Beijing, Cathy Du, chief accountant of Lenovo International Asia Pacific, notes the vast changes Lenovo has gone through in its transition from local company to global giant. ‘Lenovo is a Chinese company that is very well developed here but when it bought IBM PCD it became international overnight. The company now had several businesses worldwide to run, so to keep operations working smoothly regional functions had to be set up and new teams introduced. It was challenging, not only from a business point of view but also culturally. Here were two groups of people, Chinese and Western, now working together and sitting next to each other.’

Du joined Lenovo in April 2005, a month before the transaction with IBM was closed. She moved into IBM’s former offices and set up her team of finance professionals to help her lead the accounting operations for Asia Pacific. Everything, she remarks, had to start from scratch. ‘This was a new role created because the company wanted a China-based reporting and consolidation group for Asia Pacific.’ She has a dynamic staff of 13 Chinese professionals working with her in the office, all of whom speak English, which Du adds is vital for an international brand. Her staff also includes accountants in Malaysia and Japan who report to her on operations within the region, but this does not include China, which has its own reporting line.

The business in Asia Pacific centres on the sales of the highly regarded Think brand notebooks. Lenovo is the market leader in a number of key Asian countries such as Singapore, the Philippines and Vietnam, but suffers elsewhere because of the might of its competitors, Dell and Compaq. ‘Lenovo China products sell very well in their home market, but outside China, Lenovo International isn’t so well known. Our product sales in Asia Pacific are still some way behind those of Dell. We certainly hope to grow but the PC market is competitive and mature,’ says Du, adding rather vaguely, ‘We’ve had our ups and downs in Japan.’

In the Annual Report for 2005/2006, the management commented that shipments for Asia Pacific declined 5% and revenue totalled HK$3.5bn or 13% of Lenovo’s turnover (reported at HK$103,551m), which makes it the smallest contributor by geography (Greater China contributes 36%, followed by the Americas at 30%).

The financial performance in the region was put down to difficulties in pursuing business opportunities in Japan, a country where competition is fierce. But despite the rather negative tone of the comments, the fact that shipments of Lenovo products are on the rise in the emerging market of India bodes well for Lenovo in the region.

International demand

Du points out that the group is also intending to make its presence felt internationally with a new generation of low-cost products that harness Lenovo China’s PC knowledge and manufacturing capacity with Lenovo International’s worldwide sales network. ‘Lenovo China products need to go international if the company wants to increase its market share worldwide. There is the capacity and know-how to make new products and the demand is certainly there.’

Lenovo has already started the ball rolling with the international launch in February 2006 of its new range Lenovo 3000, a series of notebooks specially designed for small businesses and retailing at $349-$499, which pits it against its rival Dell in the low-cost PC market. Yang Yuanqing, chairman of Lenovo, recently announced that the strategic direction of the business for the next few years will focus on opportunities through small and medium-sized businesses and emerging markets, both of which could herald a significant growth spurt in Asia Pacific and beyond.

The group’s optimism for its expansion programme reveals management’s confidence in the smooth incorporation of a Western business into a Chinese one, but Du counters that there are still some challenges to overcome, particularly the accounting policies in the group. As well as her role in leading the accounting operations for Asia Pacific, she has been asked by her manager in the US head office to ensure that international accounting principles are applied company-wide.

Du argues that convergence is no mean feat given the breadth of policies applied within Lenovo China and Lenovo International, adding: ‘It’s important to have consistency throughout the group, so the policies within Lenovo Greater China and Lenovo International have been reviewed and the aim is to be internationally compliant.’ She is helping to draw up guidelines for Lenovo’s accounting departments so that staff worldwide are aware of the group’s policies. This is likely to prove all the more important given rumours of a possible New York stock exchange listing in the future (Lenovo has been listed on the Hong Kong stock exchange since 1994).

Du notes that her traditional accounting role working in financial reporting, coupled with her involvement in overall business strategy as an accounting expert, satisfies her quest to broaden her experience as a finance professional in China. ‘I took the position at Lenovo because I felt it would be challenging, but also it allows me to develop my experience as an accountant as well as carry out a managerial and consultant role,’ she says.

In the beginning

She describes herself as lucky to get where she is today in China’s fast-paced business and finance community. Her career began in the mid-1970s when the country emerged from the decade-long Cultural Revolution and she, like many of China’s youth, had a chance to sit university entrance examinations, then restored by Deng Xiaoping. ‘It was a time when there was a real thirst for knowledge in China. I got hold of some books and started studying in my spare time so I could pass my university entrance exams.’ Du had just turned 20 when she was selected for the international finance programme at the Jiangxi Banking Institute in southern China, which put her on track for a finance career.

Although she was being groomed for a place in a leading bank in China, she joined the auditing department of the Audit Administration in Beijing, which saw her lead audit assignments for World Bank-financed projects in China. During her 11-year stint with the Audit Administration, including six years as a division chief, she was selected to run two projects set up by the Canadian International Development Agency in an exchange programme, which allowed her to develop her English-language skills while living in Ottawa, as well as give her vital exposure to Western accounting and auditing practices.

By the time she left her government post in 1993, Western companies were beginning to gain a foothold in China, setting up businesses in key cities throughout the country. Motorola China was one of the first international companies to hire local Chinese professionals and Du was offered a job as an accounting manager after attending an interview. ‘To be fair, I wanted the job but I was unsure about what it would be like working for a Western company. In a way, it was against tradition; traditionally, professionals worked for the Government. But I remember very clearly that I wanted to try something new,’ she recalls.

Du went on to work for General Electric four years later, being regularly seconded to various projects within the company both in China and the US. By 2000, she had been promoted to being CFO of GE Dalian. It was an experience she values highly, but notes that working in an international company in China is essential for professional development. ‘With any large global company, you have terrific opportunities to work in a range of roles within many different operations of the company.’

Although only a year into her role with Lenovo International, Du is hopeful that the group’s strategic direction and its ongoing efforts to gain global brand recognition will offer her the opportunities to develop her skills as a finance professional and manager. ‘I think the experiences I have had throughout my career have taught me that leading a team is just as important as being an accountant,’ she reasons. ‘Being an ACCA and applying my knowledge and experience in international business has really helped me to grow.’