Liu Chuanzhi 1944–

Liu Chuanzhi
1944–

Chairman, Lenovo Group

Nationality: Chinese.

Born: April 29, 1944, in Shanghai, China.

Education: Xian Military Communication Engineering College, 1966.

Family: Married; children: three.

Career: Chinese Academy of Sciences, 1966–1968, researcher; state-owned rice farm, 1968–1970, laborer; Chinese Academy of Sciences, 1970–1984, engineer-administrator; 1984–2004, Legend Group Holdings Company, chairman; 1984–, Chinese Academy of Sciences, Computer Technology Research Institute, director; 2004–, Lenovo Group, chairman.

Awards: Model of the National Work Force, government of China, 1995; Man of Reform in China, government of China, 1995; named one of the Ten Most Influential Men of the Commercial Sector in China, government of China, 1996; named Asia's Businessman of the Year, Forbes, 2000; listed as one of the Stars of Asia, BusinessWeek, 2000; listed as one of the Twenty-five Most Influential Global Executives, Time, 2001.

Address: Lenovo Group, 20th Floor, Somerset House, Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong; http://www.legendgrp.com.

■ Liu Chuanzhi built Lenovo Group from an enterprise operating through a $24,000 loan from the Chinese government in 1984 into one of China's most important companies in less than 20 years. Two years after graduating from the Xian Institute of Military Communication Engineering, Liu was forced to perform manual labor on a state-owned rice farm. He rejoined his previous employer, the Chinese Academy of Sciences (CAS), in 1970 and worked as an engineer-administrator for the next 14 years until he had the opportunity to begin work with Legend. The company began producing its own personal computers (PCs) in the early 1990s; by 1996 it had surpassed IBM as the largest seller of PCs in China. Liu received numerous awards from the Chinese government and from major Western publications.

EARLY HARDSHIPS

Liu grew up during a turbulent period in China's history. His father had served as an executive with the Bank of China in Shanghai and worked secretly with the Chinese Communists before the party took control of the city in 1949. Liu enrolled at the Xian Military Communication Engineering College in 1961. He graduated in 1966 after specializing in radar systems. He earned a job as a researcher at the Chinese Academy of Sciences after graduation.

China entered upon its Cultural Revolution during the 1960s, during which time its schools and universities were closed by order of Mao Zedong, the chairman of the Chinese Communist Party. Liu was forced to work as a laborer on a state-owned rice farm from 1968 through 1970. It was not uncommon at this time for young adults from the cities to be sent to the countryside to work with and learn from the peasants. Nevertheless, these policies led to the virtual collapse of the Chinese economy by the end of the 1960s. The Chinese Academy of Sciences had reopened by 1970, when Liu returned to work at the institution as an engineer-administrator.

STARTING A COMPUTER COMPANY

Although Mao's successor, Deng Xiaoping, established various economic reforms during the early 1980s, Chinese entrepreneurs found it difficult to establish companies in their homeland. Nevertheless, the Chinese Academy of Sciences ran low on funds, and Liu came up with the idea of starting a computer company. Liu's superior at the academy gave him and 10 other staff members a loan of 200,000 yuan (about $24,000 in U.S. currency) to start the enterprise in 1984. "It wasn't easy," Liu told a reporter from Asiaweek. "The lowest thing you could do in the early '80s, as a scientist, was to go into business. China had a strict planned economy and there was barely room for a freewheeling company like ours" (June 13, 1997).

The company that Liu formed, which was originally named Legend Group, began in a small room in Beijing that barely covered 20 square yards. The low-level beginnings of Liu's company were often compared to the origins of Apple Computer in Steve Jobs's garage in California in the 1970s. Legend's first tasks involved research into magnetic storage technology for computers, with the goal of finding commercial applications for these discoveries.

The Chinese language was difficult to translate on a keyboard, owing to the vast number of characters. Legend developed a Chinese character set for computers in 1985, and, when the company began to produce PCs in 1990, it also began to develop technology that provided character recognition of the Chinese language. By the late 1990s Legend had produced a Chinese character recognizer for the PC, which allowed users to write Chinese characters on a digital pad and translate the characters onto a computer screen.

Legend's business grew slowly at first. For example, the company failed in its attempt to sell an electronic watch during its early years. In an interview given in 1997, Liu acknowledged that the company had confronted difficulties. "Our management team often differed on which commercial road to travel," he said. "This led to big discussions, especially between the engineering chief and myself. He felt that if the quality of the product was good, then it would sell itself. But I knew this was not true, that marketing and other factors were part of the eventual success of a product" (June 13, 1997).

STUDYING AMERICAN COMPANIES

Legend's staff was not comprised of experienced businessmen, which made the firm's early years a somewhat bumpy ride for Liu and others involved. "We were mainly scientists and didn't understand the market," Liu said. "We just learned by trial-and-error, which was very interesting—but also very dangerous" (June 13, 1997). Liu learned business on the job by studying the management structure and techniques of such companies as Hewlett-Packard and IBM.

Legend grew by distributing foreign-made computers and peripherals through the end of the 1980s. By 1990, however, the Chinese government had given Legend permission to brand and sell its own PCs. During the same year, however, China reduced its tariffs and opened the doors for foreign computer makers to enter the Chinese market. Legend had to compete with some of the same companies that Liu had studied. Legend had some competitive advantages, however. It owned the Chinese character set that it had developed in 1985, and it could take advantage of lower Chinese wage levels and the lack of tariff charges, shipping charges, and other taxes on computer-related products that its foreign competitors had to pay.

KEEPING A COMPETITIVE EDGE

By 1996 Legend had surpassed IBM for China's market share in computer sales and retained that lead even at the start of the new century. Liu ensured that his company would remain on top of the market by introducing innovations. Legend was one of the first Chinese companies to offer its employees stock options, and Liu promoted talented young people to higher-level staff positions. By the late 1990s many of Legend's managers were quite young and infused the company with their "strong entrepreneurial spirit" (March 9, 1998).

Liu intended Legend to remain on the cutting edge of computer technology. Legend beat its competitors in introducing such innovations to China as the Pentium II processor during the late 1990s. In addition, the company took advantage of the Internet to boost its sales. Legend also began to focus its attention on marketing computer services as well as equipment, much like the plan that IBM had followed during the 1980s when competitors cut into its market share.

By 2004 Legend remained China's largest maker of personal computers. The company announced in March 2004 that it would become the first Chinese company to join the sponsorship program for the Olympic Games, beginning with the 2006 Winter Olympics in Turin, Italy. Shortly after the announcement, Legend officially changed its English name to the Lenovo Group. The move was prompted by the company's first attempts to sell its computers in Europe, where the word "legend" had already been trademarked in the United Kingdom and Germany for the products of its competitors.

Liu, who once described himself as "a very authoritarian manager," won numerous awards for his leadership of Lenovo over the course of its first two decades. He was honored by the Chinese government as the Model of the National Work Force in 1995 and the Man of Reform in China, also in 1995. In 1996 the government honored him as one of the ten most influential men of the commercial sector in China. He was named Asia's Businessman of the Year by Forbes in 2000; listed as one of the "Stars of Asia" by Business Week in 2000; and listed as one of the twenty-five most influential global executives by Time in 2001.

sources for further information

"A Computer Legend in the Making," McKinsey Quarterly, July 14, 2001, http://att.com.com/2009-1017-269929.html.

Doebele, Justin, "Who Needs an M.B.A.?" Forbes, January 24, 2000, p. 80.

Erickson, Jim, "Making of a Legend: Beijing's Top PC Maker is Going Abroad, but China is Still the Key," AsiaWeek, June 13, 1997, http://www.asiaweek.com/asiaweek/97/0613/biz1.html.

"Legend in the Making," Economist, September 15, 2001, p. 74.

Naham, Anne, "The Scientist Who Could: State-Owned Enterprises Should Follow Us," AsiaWeek, June 13, 1997, http://www.asiaweek.com/asiaweek/97/0613/biz2.html.

Paul, Anthony, "Liu Chuanzhi, CEO; Legend Group," Fortune, January 24, 2000, p. 59.

Powell, Bill, "The Legend of Legend," Fortune Asia, September 16, 2002, pp. 34–37.

"The Stuff of Legend," South China Morning Post, December 11, 1994.

—Matthew C. Cordon