I have to confess that my respect for Lenovo is growing. When it first purchased the personal computer division of IBM (announced in December 2004 and completed in May 2005), I didn't give Lenovo much of a chance of making it work. It still has plenty of problems to solve--IBM's PC division made great laptops, but no profit; the PC hardware business is still cutthroat and low margin--but I've revised my original bleak assessment. Under the circumstances, Lenovo is doing well.

What are the signs? Well, for one thing, Lenovo is the only truly international Chinese consumer brand that I can think of. There are other Chinese firms that operate overseas, but none has created the kind of broad brand awareness that Lenovo has or is building an international presence in the way that Lenovo is. Huawei and CNOOC may be known in their industries, but mention their names outside of China and away from the network equipment or oil industries and see who blinks.

How things might have been?

This elevation in status can be seen in recent press coverage of Lenovo's competition with Dell in particular. On September 12, BusinessWeek published an interesting article by Hong Kong-based tech journalist Bruce Einhorn on Lenovo's battle with Dell in Asia. It's wasn't all good news. Einhorn pointed out that Lenovo's strong position in the Asia-Pacific region was due almost entirely to its walloping share of the huge China market, that Lenovo was relatively weaker in the rest of the region, and that it was cutting prices to compete with Dell and other international companies. But the very fact that Lenovo is today discussed in terms of its competition with global giants like Dell, HP and others instead of other Chinese PC manufacturers is a leap forward for the company, and unusual in the world of Chinese companies.

How has Lenovo done it? I think there are three main reasons:

The deal
Many people will correctly point out that Lenovo's international ascendancy is built almost entirely on the back of the takeover of IBM's PC division and the sledgehammer ThinkPad notebook line built by IBM. But growth through acquisition is a time-honored western business tactic, and I don't see why Lenovo should be downgraded for learning from the best. In fact, I think Lenovo deserves credit for having the vision to pursue a tricky deal and the chutzpah to make it work even in the face of some xenophobic opposition from the US (which erupted again when computer services firm CDW recently tried to sell a large number of Lenovo computers to the US State Department). I wonder if that deal would still be possible today.

Lenovo picked a good PC division to buy. IBM's PC division may not have been profitable, but it was still a leader in its business with a good brand. Not every Chinese firm has chosen its acquisitions as wisely. Chinese consumer electronics firm TCL is still struggling to wring some benefit out of its purchase of struggling French television maker Thomson, and it is still invisible overseas. White goods maker Haier failed in its bid for America's Maytag and it is still known in the US primarily for its mini-fridges. Not the makings of an empire.

Post-deal management
Acquisitions are notoriously tricky and can come off the rails in any number of ways. Furthermore, culture clashes between Chinese and American companies have produced a string of failed joint ventures over the years. But after some early wobbles, Lenovo has managed not to screw up the acquisition or damage or cheapen the ThinkPad brand, which is what I once was sure it would do. Importantly, the ThinkPad halo has helped the Lenovo name, rather than Lenovo name tainting the ThinkPad brand, which is what would have happened if Lenovo had managed things badly after the deal.

The people
Lenovo has hired a top-notch international management team to run its reconstituted PC business. Critically, it hasn't been shy about bringing in qualified, experienced foreigners with good management and marketing chops and putting them in positions of power. Chinese companies are not always good about recognizing when they need foreign experience or perspectives in their management teams, and not always good about making their foreigners feel welcome even when they do recognize that. In his article, Einhorn noted that Lenovo has been raiding Dell for talent in the region, a trend which has been observed by Chinese media as well, and which started with the hiring of Lenovo's current CEO, former Dell Asia-Pac chief Bill Amelio. The foreigners look like they're being allowed to do their jobs, and this will help Lenovo. (One of Lenovo's marketing chiefs in the US keeps an entertaining blog here, by the way.)

It's not all wine and roses, of course. Lenovo is still relatively small. Dell nailed down almost four times Lenovo's revenue last year. Also, Dell and HP are canny competitors, and foreign companies are eating into the China market share that has been the bulwark of Lenovo's strong position in the Asia-Pacific region. ThinkPad is still the foundation of Lenovo's credibility overseas, and its other PC product lines don't necessarily export all that well. But even if there is still room for improvement, Lenovo has come further internationally than any other Chinese consumer brand. In China, Lenovo is now in the enviable position of being the rare domestic brand with international glamor. It is the only Chinese company that has undertaken a global Olympics sponsorship, as opposed to the internationally less visible China-only deals of other Chinese sponsors. Lenovo is already rated one of China's strongest brands by BusinessWeek and branding consultancy Interbrand, and I expect it to make more international waves in the coming years as well. Lenovo is beginning to acquire an aura of--dare I say it?--sexiness. (Something that China's leading brand, China Mobile, is conspicuously short of.)

Perhaps this means I've been in China too long and my standards have dropped. But about 18 months ago, a Chinese colleague of mine, an extremely fashionable and cosmopolitan young woman, was buying a new computer. She was looking at Dells. I asked her if she would consider a Chinese brand such as Lenovo. She sniffed in disdain. "I would never buy a Chinese computer," she said. "The quality just isn't there." What she meant was that she would never buy a Chinese brand, since plenty of internationally branded computers are assembled in China. And, indeed, she bought a made-in-China Dell.

With Lenovo on the rise and ThinkPads maintaining their good reputation, I wonder if she would make the same choice today.

Disclosure: My firm represents Lenovo's mobile phone handset division in China, although I don't work on that account. My firm does not repesent Lenovo's PC division.