China’s Lenovo has been on a big buying spree. Last week, it snapped up IBM’s low-end server business for $2.3 billion. Then the PC giant followed that up with a $2.9 billion grab for the Motorola handset business from Google. That’s $5.2 billion of acquisitions in a few days. Not bad.
Why the binge? The deals tell us quite a bit about where Chinese industry finds itself right now. Though China is a manufacturing behemoth and the world’s top trading nation, it also finds its competitive position in the global economy changing rapidly. The low costs that had been the foundation of Chinese industrial competitiveness are history as wages rise. So now Chinese companies will have to compete head-to-head with their international rivals on technology, managerial skill and branding.
Some Chinese firms are doing just that, such as telecom equipment maker Huawei. But overall, Chinese industry lacks the know-how…
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