Yang Yuanqing
| Yang Yuanqing | |
|---|---|
| 杨元庆 | |
 | |
| Yang in 2013. | |
| Born | November 12, 1964 (age 61) Hefei, Anhui, China |
| Nationality | Chinese |
| Citizenship | People's Republic of China |
| Education | Shanghai Jiao Tong University (BS, computer science, 1986) University of Science and Technology of China (MS, computer science, 1988) |
| Alma mater | Shanghai Jiao Tong University; University of Science and Technology of China |
| Occupation | Business executive, philanthropist |
| Years active | 1989–present |
| Employer | Lenovo |
| Company | Lenovo |
| Organization | Chinese People's Political Consultative Conference China Entrepreneurs' Association |
| Title | Chairman and chief executive officer of Lenovo |
| Term | 2001 – present |
| Predecessor | Liu Chuanzhi |
| Board member of | Baidu New York Stock Exchange International Advisory Committee |
| Known for | Leading Lenovo's acquisition of IBM's personal computer business and its rise to the largest PC maker in the world |
| Awards | Edison Achievement Award (2014) Forbes Asia Businessman of the Year (2008) May Fourth Youth Medal (1999) |
| Net worth | Estimated US$1.5 billion (2024) |
| Salary | About US$14 million (fiscal 2012) |
Yang Yuanqing (杨元庆; born 12 November 1964) is a Chinese business executive who has served as chairman and chief executive officer of Lenovo. He joined the company in 1989 as a salesman earning the equivalent of about US$30 a month, was placed in charge of its personal computer division at 29, succeeded the founder Liu Chuanzhi as chief executive in 2001, and directed the 2005 acquisition of IBM's personal computer business — the transaction that made a Chinese manufacturer the owner of the ThinkPad brand and, within a decade, the largest personal computer maker in the world.
Yang is known within Lenovo, where colleagues refer to him as "YY", for a series of internal changes that were unusual in Chinese enterprises of the period: written job descriptions with defined responsibilities, performance-linked bonuses in place of the uniform payments then customary, and the abolition of formal titles in favour of given names. He is known outside it for two things — the management of a cross-border integration that comparable transactions had generally failed, and his decision in 2012 and 2013 to redistribute his own performance bonuses, totalling more than US$6 million, among some 10,000 production and clerical employees.
He has held the chief executive role, with an interruption between 2004 and 2009 when he served as chairman while an external chief executive ran the company, for longer than any of his counterparts at the major personal computer manufacturers. He sits on the National Committee of the Chinese People's Political Consultative Conference and on the board of Baidu, and has funded biomedical research at the University of North Carolina.
Background: the Chinese computer industry
Legend's origins
The company Yang joined in 1989 had been founded five years earlier, in 1984, by eleven researchers from the Institute of Computing Technology of the Chinese Academy of Sciences, led by Liu Chuanzhi, with start-up capital of 200,000 yuan provided by the institute. It was named Legend, and traded under that name in China until the international rebranding to Lenovo in 2003.
Its initial business was not manufacturing. Legend distributed imported computers, principally IBM and AST machines, and developed a Chinese-character processing card — the Legend Chinese card — that allowed Western-designed personal computers to handle Chinese script, a genuine technical requirement in a market where the operating systems and applications were written for alphabetic languages.
The market Yang entered
The Chinese personal computer market of the late 1980s and early 1990s was small, expensive and dominated by foreign brands. Import duties had protected domestic assemblers, but the tariff reductions of the early 1990s removed that protection and exposed Chinese manufacturers to direct competition from IBM, Compaq, AST and Hewlett-Packard, which had greater scale, better products and established reputations.
The domestic industry's response divided along a line that determined which firms survived. Some competed on price alone; others attempted to build distribution and service networks reaching a country whose geography, regulatory fragmentation and uneven economic development made national coverage extremely difficult. Lenovo took the second course, and its distribution system is generally identified as the reason it displaced the foreign brands in China during the 1990s.
Four state-owned enterprises dominated the Chinese computer market at the start of the decade, all with government backing that Legend, as a spin-off of an academic institute, did not receive. All four had lost their position by its end.
Early life and education
Yang was born on 12 November 1964 in Hefei, the capital of Anhui province. Both his parents were trained as surgeons, but were paid on the same scale as manual workers under the wage system of the period, and the family was poor.
He has described his father, Yang Furong, as a disciplined man with exacting standards, and attributed to him his own approach to targets: "If he set a target, no matter what happened, he wanted to reach it."
His parents wanted him to study medicine, and he had an interest in literature. On the advice of a family friend who was a university professor, he chose computer science instead. He took an undergraduate degree at Shanghai Jiao Tong University in 1986 and a master's degree at the University of Science and Technology of China in 1988.
Career at Lenovo
Joining, 1989
Yang had intended to become a university academic. While in Beijing conducting research for his master's degree, he saw a newspaper advertisement for positions at Legend, applied, and was hired into sales in 1989 at the age of 25, on the equivalent of about US$30 a month.
His first substantial assignment was to prepare a bid to become an IBM reseller; he submitted it and then discovered that he had quoted roughly twice the price of his competitors. He nevertheless established a strong sales record, travelling to meet distributors across China and using his technical background to sell to buyers who wanted to understand the products.
Within a year he had lost interest in sales and sat the TOEFL examination in preparation for postgraduate study abroad. Liu Chuanzhi asked him repeatedly to stay, and persuaded him to defer the plan for two years; the tariff reductions on imported computers, and the crisis they produced for Legend, meant the deferral became permanent.
Liu had been observing him. "He had clear goals, was broad-minded and straightforward," Liu said later. "We trusted him." Liu described him as a man who moves forward, takes risks and aims to innovate, and in 1994 placed him in charge of Legend's personal computer division at the age of 29.
Reorganizing the division
Yang's changes to the division were organizational before they were commercial, and several were unusual in Chinese enterprises at the time.
He introduced written job descriptions with defined responsibilities, and a system of performance evaluation determining annual bonuses. The prevailing practice in Chinese firms was to distribute bonuses of equal size to all employees, which Yang regarded as removing any connection between effort and reward; the associated habit, which he described as workers waiting passively for superiors to issue instructions, was what he set out to break.
He discouraged the use of formal titles and required staff to address one another by given names — a substantial departure in a workplace culture organized around hierarchy and forms of address. To enforce it, he required managers to stand outside their offices each morning greeting employees while holding signs bearing their own first names.
When the division moved to a new building in 1997, Yang used the move to sever what he described as the company's cultural links to its past, introducing a formal dress code and training all employees in telephone manner. His stated objective was that his staff should think and act like technology workers in developed markets.
Distribution
Yang's principal commercial decision concerned distribution. Legend had operated a mixed model of direct sales and independent distributors, which proved unworkable across a country of China's size and regulatory variation.
He abandoned direct sales in favour of exclusive reliance on independent agents, cutting the division's sales staff from more than 100 to 18 in 1994. To secure the distributors' commitment he offered a wide product range at prices that left them a margin, supervised the marketing of Legend products to protect their interests, and arranged training with Microsoft and Intel. The contrast with foreign competitors, which commonly squeezed distributor margins, was deliberate.
He also built a system to monitor distributors' sales, inventory, cash flow, compliance and pricing, which gave Legend visibility into demand that its competitors lacked. Analysts have generally identified the distribution network, together with after-sales service, as the principal reason for Lenovo's displacement of the foreign brands in the Chinese market.
Legend became the leading personal computer brand in China in 1997 and held the position thereafter.
Chief executive, 2001
Liu Chuanzhi retired as chief executive in 2001 and Yang succeeded him at the age of 36, with Liu remaining as chairman. The company was renamed Lenovo in 2003 for international purposes, the existing English name Legend being unavailable in many markets.
Yang's early years as chief executive included an unsuccessful diversification into internet services, mobile handsets and information technology services, undertaken during the period when Lenovo's domestic personal computer position appeared secure and growth had to come from elsewhere. Most of these ventures were subsequently wound down or sold, and Yang has described the period as a lesson in the costs of moving away from what the company understood.
The IBM acquisition
The transaction
In December 2004 Lenovo agreed to acquire IBM's personal computing division for about US$1.25 billion in cash and stock, together with the assumption of roughly US$500 million in liabilities, bringing the total to approximately US$1.75 billion. The sale was completed in May 2005. IBM took a shareholding of about 19 percent in Lenovo and licensed the IBM brand to the acquirer for a transitional period; Lenovo acquired the ThinkPad and ThinkCentre lines outright, together with IBM's research facility at Yamato in Japan and its personal computer operations at Raleigh, North Carolina.
The disparity was conspicuous. Lenovo's annual revenue was roughly US$3 billion; the business it was buying had revenue of about US$9 billion, and was losing money. Commentary at the time was largely sceptical, drawing on the record of comparable cross-border acquisitions, and the phrase "snake swallowing an elephant" was widely used in the Chinese press.
Political opposition
The acquisition required approval from the Committee on Foreign Investment in the United States, and attracted opposition from members of Congress who argued that a Chinese-owned manufacturer supplying computers to American government agencies presented a security risk. The transaction was approved with conditions, including restrictions on Lenovo's access to the Raleigh site.
The issue recurred in early 2006, when the State Department was criticized for purchasing 16,000 Lenovo computers and critics characterized the company as controlled by the Chinese government and a potential vehicle for espionage. Yang responded publicly and directly: "We are not a government-controlled company." He argued that Lenovo had been an instrument of China's transition to a market economy rather than a beneficiary of the state, and pointed out that in the early 1990s it had competed against and defeated four state-owned enterprises that dominated the Chinese computer market with full government backing, while Lenovo itself received no special treatment. The purchase proceeded.
Yang judged that the question would recur unless addressed directly, and set out to deal with the American political system rather than around it. In June 2006 he arranged to be seated next to C. Richard D'Amato, a member of the congressional commission that had raised the concerns, and made his case in person; D'Amato said afterwards that he had been impressed by Yang's candour. The issue receded.
Integration
The integration of the IBM business is the achievement on which Yang's international reputation principally rests, because the base rate for such transactions is poor and the specific obstacles were substantial: the acquired business was larger than the acquirer, unprofitable, staffed by employees who had worked for one of the most prestigious corporations in the industry, and located in countries whose languages Lenovo's management did not speak.
Yang made English the company's working language, a decision that placed him at an immediate disadvantage since he did not speak it well. He moved his family to Morrisville, North Carolina, hired a private tutor, and watched American cable news to practise. He posted large numbers of Lenovo executives to the United States for extended periods, and recruited senior managers internationally; by 2013 Lenovo's fourteen most senior executives came from seven countries.
He also declined to concentrate authority in one place. Lenovo operated with dual headquarters at Beijing and Morrisville, rotated executive meetings among locations and time zones so that the inconvenience of unsocial hours fell on everyone in turn, and retained IBM's Yamato research centre, which continued to develop the ThinkPad line. An American Lenovo executive interviewed by The Economist credited Yang specifically with making the company a place where foreigners were willing to work.
Chairman and return as chief executive
Yang served as chairman of Lenovo's board from 2004 to 2008, during which period William Amelio, recruited from Dell, served as chief executive. The arrangement was intended to bring experienced international management to a company that had just acquired a global business.
The global financial crisis produced heavy losses, and in February 2009 Yang gave up the chairmanship and returned as chief executive, with Liu Chuanzhi resuming the chairmanship for a period. Yang subsequently held both roles.
Under his direction Lenovo returned to profit, recovered share in mature markets, and became the largest personal computer manufacturer in the world by unit shipments in 2013 — a position it has held for most of the period since.
Later acquisitions
Lenovo made two substantial acquisitions in 2014. It bought Motorola Mobility from Google for about US$2.9 billion, acquiring a handset business and the patents and brand associated with it, and IBM's low-end server business for about US$2.3 billion, extending its data centre operations.
The Motorola acquisition has been the less successful. Lenovo has retained the brand and holds a significant position in Latin America and parts of Europe, but has not re-established Motorola in the North American premium segment or made substantial progress in China against domestic handset manufacturers.
Management approach
Performance culture
Yang has described his objective as replacing what he characterized as the traditional Chinese working style — "waiting to see what the emperor wants" — with a performance culture in which responsibility is defined and results are measured.
He holds an annual banquet for Lenovo's senior executives at his home in Beijing, at which each guest stands and offers a toast setting out the targets for their business unit. The custom converts the setting of objectives into a public commitment among peers.
His stated approach to entering markets is to take them individually and to aim for scale quickly. "If you don't have enough scale, if you don't have enough volume, it's hard to make money," he said. "If you don't have enough market share, it's hard to make money. That's why we enter the markets one by one. When we enter a market, we want to quickly get double-digit market share."
The redistributed bonuses
In 2012 Yang received a bonus of about US$3 million following record profits, and redistributed it among roughly 10,000 Lenovo employees. The recipients were mostly production and reception staff, who received an average of about 2,000 yuan, or roughly US$314 — close to a month's pay for a typical Lenovo worker in China at the time.
He repeated the gesture in 2013 with a further US$3.25 million, distributed among some 10,000 employees in twenty countries, of whom about 85 percent were in mainland China and most were hourly production staff.
A Lenovo spokesman, Jeffrey Shafer, said that Yang had wanted to redirect the money to employees as a tangible gesture for what they had done, and that Yang — who held about 8 percent of Lenovo's stock — felt he was rewarded sufficiently as an owner of the company. Yang's total compensation for the financial year ending March 2012 was about US$14 million, of which US$5.2 million was bonus.
Shareholding
Yang substantially increased his personal stake in Lenovo in 2011, acquiring 797 million shares; he had previously held about 70 million. He financed the purchase personally and commented that although the transaction was a private financial matter, he wished to be clear that the decision rested on his belief in the company's prospects. "Our culture is built on commitment and ownership," he said. "We do what we say, and we own what we do."
Communication
In April 2015 Yang required every member of Lenovo's media team to maintain an active presence on at least one social media platform. He is himself an active user of Sina Weibo, Twitter and LinkedIn, and encourages his staff to write about their personal lives rather than confining themselves to corporate material: "I cannot just promote a Lenovo product every day. I have to get people interested first and then find the opportunity to promote it once in a while."
Public service and philanthropy
Yang serves on the National Committee of the Chinese People's Political Consultative Conference, the state's principal advisory body, whose membership of more than 2,000 is drawn from across Chinese society. At its annual meeting in 2014 he proposed legislation to protect privacy and personal data on the internet and on electronic devices, arguing that legal gaps and widespread corruption presented major obstacles to securing personal information.
He sits on the board of the Communist Youth League of China, serves as a director of the China Entrepreneurs' Association, and is a member of the New York Stock Exchange's International Advisory Committee. He is a director of Baidu, sits on the board of visitors of the Fu Foundation School of Engineering and Applied Science at Columbia University, and lectures as a guest at the University of Science and Technology of China.
In March 2015 Yang joined the CEO Roundtable on Cancer, an international non-profit organization concerned with cancer prevention and research, and undertook publicly to implement its CEO Cancer Gold Standard workplace programme at Lenovo.
In October 2015 the University of North Carolina announced a US$1 million donation from Yang funding biomedical research through grants of US$75,000 per scholar. The first recipients were Jonathan Berg, associate professor of genetics and medicine; Maureen Su, associate professor of pediatrics, microbiology and immunology; and Yisong Wan, associate professor of microbiology and immunology.
Assessment
Yang's reputation rests principally on the IBM integration. Cross-border acquisitions of this type — a smaller acquirer from an emerging market buying a larger, loss-making business from an established multinational — have a poor record, and the specific case combined every difficulty the category presents. That Lenovo retained the ThinkPad engineering organization, returned the business to profit, and became the largest personal computer manufacturer in the world is the strongest evidence available for his management.
Critical assessments note that the personal computer market Lenovo came to lead was a maturing one that IBM had chosen to exit for sound reasons, that Lenovo's margins have remained thin, and that the company's attempts to diversify beyond personal computers — into internet services in the early 2000s, and into handsets through Motorola after 2014 — have largely not succeeded. Lenovo's data centre and services businesses have grown, but the company remains substantially dependent on a commodity hardware market.
His standing in China is less contested. Lenovo's displacement of the foreign brands in the domestic market during the 1990s, achieved through distribution and service rather than price, is treated as a founding episode of the modern Chinese technology industry, and Yang's role in it preceded and made possible everything that followed.
Awards and recognition
- May Fourth Youth Medal, All-China Youth Federation, 1999
- BusinessWeek Stars of Asia, 1999 and 2001
- Fortune Asia Asia's 25 Most Influential Business Leaders, 2004
- CCTV China Economic Figures, 2004 and 2012
- Fortune China Chinese Business Leader of the Year, 2007
- Forbes Asia Businessman of the Year, 2008
- Finance Asia Best CEO in China, 2011
- Edison Achievement Award, 2014, shared with Elon Musk; the first recipient from East Asia
- Asian Scientist 100, 2016
Yang was selected to accompany Xi Jinping, General Secretary of the Chinese Communist Party, on a state visit to the United States in September 2015, and was first listed among the world's billionaires by Forbes in 2015.
See also
References