Company-owned stores on the anvil for Lenovo India
Chinese computer technology giant Lenovo, has announced plans to open company-owned stores in India. The stores are to be a single-point destination for all of Lenovo's products equipped with with a service and demonstration center too. The focus would be on enhancing the customer experience, rather than driving revenue. The stores would open under the Indian government's single brand retail foreign direct investment rules.
Lenovo is a $46 billion Chinese multinational computer technology company. It designs, develops and manufactures products like tablets, smartphones, computers and servers. Founded as Legend Holdings in 1984, it soon became China's leading computer company and went on to acquire IBM's Personal Computers Division. Global giants IBM and Motorola were acquired by Lenovo in 2005 and 2014 respectively.
Lenovo has built a large market share in India based on bulk orders to government agencies and large companies. It became established as a market leader in India when in 2012, the Tamil Nadu government ordered one million laptops. It has tie-ups with 40 regional distributors to reach small towns. Presently, it has around 1,000 exclusive stores under the franchise model in the country.
Presently, Lenovo India has a computer manufacturing plant in Puducherry. The company has also started assembling smartphones in the country through contract manufacturing with Flextronics.
With the Indian computer and mobile market growing steadily, multinationals like Apple had been pushing the Indian government to relax its foreign direct investment norms, to be able to set up their company-owned stores. In November 2015, India waived the 30% local sourcing norms for single-brand retailers, when they launched their stores in the country. Online stores were permitted for single-brand retailers as well.
Relaxed FDI norms spurred multinational consumer electronics brands towards applying for single-brand licenses, with global giant Apple, leading the way. The license would enable Apple to open its reputed branded stores and bring their global customer experience to the Indian market. Chinese phone maker Gionee also declared its plans to set up company stores to help establish its brand in the country.
India is slated to be the first country that will see Lenovo open its flagship stores, with the company announcing plans to file the proposal. Lenovo is aiming to boost its market share and plans to revamp the Lenovo e-store by April, to drive up traffic. A second plant for manufacturing computers and a unit for assembling tablets are on the cards as well.