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Lenovo plans plants in inland to reduce costs

07-16-2010 16:14 BJT

BEIJING, July 16 (Xinhuanet) -- Chinese computer maker Lenovo Group said on Thursday that it is considering expanding its manufacturing capacity in western China in order to meet rebounding market demand and further cut costs.

Rory Read, president and chief operating officer of the world's fourth-largest computer vendor, said the company is planning to build more factories in inland regions, as it has witnessed sustained business growth.

"Our strategy is to increase our worldwide market share significantly. We are going to need manufacturing capacity in eastern provinces as well as in the west," he said.

Lenovo has four factories in China, in Beijing, Shanghai, Shenzhen and Huizhou, Guangdong province.

But a series of suicides at Foxconn's Shenzhen plant and strikes at Japanese automaker Honda's domestic suppliers in Guangdong province earlier this year have significantly boosted manufacturing costs in coastal regions.

That has put great pressure on companies that have most of their manufacturing operations in the region.

Read refused to comment on the impact of surging manufacturing cost in eastern China on Lenovo, only noting that capacity expansion was driven mainly by Lenovo's rapid growth rate both in China and globally.

But Yang Yuanqing, chief executive of Lenovo, said on Thursday that the company aims to significantly reduce costs in the next 12 to 24 months.

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