Lenovo Is Banking on Building Its Brand to Stay Ahead of HP

Lenovo Group Ltd. (992), the world’s largest maker of personal computers, said investment in its brand will boost profit margins and help maintain its global lead over Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL)

Innovation and new products underpin efforts to increase market share amid slumping global demand, Chief Financial Officer Wong Wai Ming said by phone today, without elaborating. The company is continuing its “PC Plus” strategy, which includes tablet computers, smartphones and televisions, he said.

Lenovo moved into the top spot in the second quarter after posting the narrowest decline in shipments among the world’s top five vendors, market researcher Gartner Inc. said in a report yesterday. Chief Executive Officer Yang Yuanqing is pushing software and services to help drive hardware sales and limit the impact of the sliding PC market.

“We have invested constantly in the past one to three years in marketing and R&D,” Wong said. “We are very confident this will help our margin improvement.”

Lenovo, with headquarters in Beijing and Morrisville, North Carolina, rose 4.1 percent to HK$7.18 as of 1:01 p.m. in Hong Kong.

Yang, along with heads of other Chinese and U.S. companies, is scheduled to meet with Secretary of State John Kerry and Treasury Secretary Jacob J. Lew at the U.S.-China Strategic and Economic Dialogue in Washington later today, the company said.

North America has become more important for Lenovo’s PC business as sales in China showed a decline in the second quarter, according to Gartner.

More than half of Lenovo’s revenue comes from outside of China, the company said in an e-mailed statement. Lenovo’s PC market share rose to 16.7 percent of global PC market share in the second quarter from 14.9 percent, according to Gartner.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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