Lenovo mulls using India as an export hub, says Gianfranco Lanci

Right now, our plants in India are not running at 100 per cent capacity, but we are not far from it, says Lenovo COO

Lenovo’s executive council, the top decision-making body in the company, is on its second visit to India in three years, signifying the country’s growing importance in the Chinese technology giant’s vision. Gianfranco Lanci, corporate president and chief operating officer at Lenovo, in an interview with Bibhu Ranjan Mishra and Alnoor Peermohamed, says the company not only sees India as a future market but is also eyeing to use the country as a hub to export PCs to neighbouring countries. Edited excerpts:

Lenovo’s entire global executive council of is in India again. What should we infer?

In terms of revenue, India is probably the fifth- or sixth-largest market for Lenovo today. There are bigger markets like China, the US, Japan, Germany and the UK, but the growth potential that India offers is one of the best in the world. And the potential is actually a lot better than the growth because India’s GDP is growing at around 8 per cent, probably the best in the world. It is also because you have 1.3 billion people and the country is moving towards digitalisation. 

What has been your growth in India? 

In certain segments, we are certainly growing in double digits. But frankly speaking, in smartphones, we are not growing at that rate. We have made some mistakes, and we’re taking a lot of actions on smartphones in terms of simplifying the product offering. We are relooking at our brand strategy and we’re doing certain things to come back stronger in the smartphone segment. PC is doing well, while in the data centre segment, the growth here is really good.

India is pushing for localisation by giving sops to make-in-India products. How are you tapping this?

We have two factories in India — one for PCs and one for smartphones. We’re already making 100 per cent of our smartphones in India. We were manufacturing in India even before ‘Make in India’ was launched. We have been here from the IBM days. 

Are you planning to expand your existing plants or set up newer ones?

It’s something that we’re considering. How soon it can happen is difficult to say because we’re waiting for a lot of things. The expansion we are considering is going to be in the same locations where we are today, for sure. One important thing for both smartphone and PC manufacturing is it’s not only the factory but also the ecosystem that is around the factory. Phones we’re already manufacturing 100 per cent here, so we cannot grow it any further. It’s going to be for PCs.

Will this cater to the India market alone or will it be for exports as well? 

Exports is one thing that we are evaluating. So, if we have a facility here and we can produce more, why can’t we do the same in other countries as well? It makes sense because you can cover all the countries like West Asia and even Africa. Because in terms of lead time, I think India is even closer to these countries than China. If I look at even by sea, India is close to Dubai and many countries in West Asia. This (exporting from India) is what we are considering.

Is there a trigger that is making Lenovo think of exporting from India when China and Taiwan are in the neighbourhood?

One is logistics. If you need to move to West Asia or Africa, having a good factory in India is better than China because the lead time is less. If you look at the labour cost in India, it’s no different than China. So there’s no disadvantage as such, there may be even an advantage. And if you look at China, sometimes you have labour shortages, and finding workers there is also becoming more difficult.

Are your plants in India running to their full capacity?

Right now, we’re not running at 100 per cent capacity, but we are not far from it. If we want to export, we need to expand capacity. We have some room for increasing capacity, but when you do these things (exports), you either go big or don’t do anything.