Liu Chuanzhi
Liu Chuanzhi is a prominent Chinese business tycoon best known as the founder of Lenovo, which became the world's largest computer manufacturer by 2024. Born on April 29, 1944, in Shanghai, Liu was raised in a politically active family, which influenced his early education and career trajectory. After working as a researcher and engineer at the Chinese Academy of Sciences, he co-founded Lianxiang, later known as Legend Holdings, in 1984, during a time of significant economic reforms in China. Under his leadership, Lenovo initially struggled but eventually found success with the development of a circuit board that processed Chinese characters, leading to its entry into computer manufacturing.
Liu's management style evolved from his early authoritarian approach to a more refined method that helped attract top talent, exemplified by hiring a larger team than initially planned in response to a high applicant pool. Lenovo gained international recognition after acquiring IBM's personal computer business in 2005. Although Liu took a step back from day-to-day operations in 2012, he remains influential, focusing on diversifying Legend Holdings' investments beyond IT. Liu is regarded as one of the most significant business figures in China and globally, with ongoing involvement in various sectors, including real estate and agriculture. He is married and has three children, one of whom leads a major technology company in China.
Subject Terms
Liu Chuanzhi
Founder of Lenovo
- Born: April 29, 1944
- Place of Birth: Shanghai, China
Primary Company/Organization: Lenovo
Introduction
Chinese business tycoon Liu Chuanzhi is the founder of Lenovo, which in 2024 was the world's largest computer manufacturer. Having taken advantage of Chinese market reforms, he continues to be a pioneer of Chinese capitalism, and his management style is widely studied.
Early Life
Liu Chuanzhi was born on April 29, 1944, in Shanghai, China. His paternal grandfather was the head of a Chinese bank in Zhenjiang, and his father was a senior executive with the Bank of China. His maternal grandfather was the finance minister for Sun Chuanfang, a warlord who was the leader of the League of Five Provinces. The Liu family moved to China's capital, Beijing, after the Communist revolution in 1949, and Liu's father joined the Communist Party.
After high school, Liu intended to become a military pilot, but he was rejected because of the political affiliation of a family member. He attended the People's Liberation Army Institute of Telecommunication Engineering, studying engineering and radar science. He had intended to study nuclear weapons, but again the political connection held him back, and he was barred from certain classes. It was during his education that he was first exposed to computers. Upon graduation in 1966, Liu took a job as a researcher at the Chinese Academy of Sciences.
During the Cultural Revolution, Mao Zedong closed all schools and universities, and many young people were sent to work on farms. In 1966, Liu was sent by the state to a Macanese rice farm. After working on the rice farm, he was sent to another farm in Hunan Province, which specialized in the reeducation of political criminals.
In 1970, he returned to Beijing and took a job as an engineer at the Computer Institute. He worked there for fourteen years, developing mainframe computers, before leaving in 1984. He briefly worked at the Chinese Academy of Sciences before cofounding Lianxiang, the company known in the West as Legend Holdings.
Life's Work
A few years after economic reforms began in China, with foreign investment now permitted and some entrepreneurial activity encouraged, Liu founded Lianxiang with ten other engineers in Beijing, working together in a small office. The word lianxiang is translated as legend (thus Legend Holdings). Lianxiang is a holding company that owns numerous smaller companies, and Lenovo is used when referring to the computer company that was Legend Holdings' first business. In part because of China's socialist heritage, two generations old when the company was founded, it was difficult to transition from science to business, because business was seen as a less serious endeavor and beneath the dignity of a skilled scientist.
Lianxiang struggled as a result and attempted various ventures, including television imports and digital watch manufacturing. Liu has spoken openly about the way his management team learned from their failures. They did not know the business world and did not know how to apply their engineering knowledge to making money and running a company. The pressure of starting the business in a country that was not friendly to entrepreneurs exacerbated Liu's chronic insomnia, but he never considered giving up. The first real success the company had was in developing the Han-Card, a circuit board that would process Chinese characters for personal computers. Following that lead, the company began to manufacture computers.
Liu's management style was severe in the early days. Again, he has spoken and written openly about the lessons he learned and the major differences between the Lenovo of the 1980s and 1990s and the Lenovo of the twenty-first century. In the twentieth century, he was an authoritarian, even a tyrant. Those who were late for meetings were expected to shame themselves by standing in silence. Those who did not deliver the results Liu wanted could expect to be verbally dressed down in front of their coworkers. However, over time, Liu learned to run a business, just as Lenovo was learning to be a business, and it began to attract increasingly higher-quality employees.
In 1988, Lenovo was one of the first postreform Chinese companies to place an advertisement looking for employees, resulting in five hundred applicants for sixteen slots. Liu was instrumental in the decision to hire fifty-eight people instead of sixteen, in order to capitalize on the influx of talented interest. One of the fifty-eight was Yang Yuanqing, who would later succeed Liu as Lenovo's chief executive officer.
Liu's ties to the Academy of Sciences helped secure early working capital and contracts. Lenovo took advantage of government incentives to expand to Hong Kong, where the company formed a partnership with a government-run business headed by Liu's father.
As successful as it was in China, Lenovo was unknown to many Americans until 2005, when it acquired IBM's personal computer business, including the famous ThinkPad line of notebook computers named for IBM's nearly century-old slogan. Developing the PC portfolio and forming a joint venture with Japanese company NEC made Lenovo the world's second-largest computer manufacturer by 2011, and the largest by 2013. It continues to develop the ThinkPad line and in 2008 introduced the IdeaPad, the result of internal research and development. While the ThinkPad was designed for business customers, the IdeaPad—not coincidentally bright white like Apple's products, in contrast to the ThinkPad's black design—is intended as a consumer product. Similarly, Lenovo continues to sell the ThinkCentre line of desktop computers introduced by IBM shortly before the sale, while developing IdeaCentre desktops. Unlike most desktops, IdeaCentres are all-in-one systems, incorporating both the processor and the monitor into a one case. Each IdeaCentre model has a distinctly different design and incorporates Veriface facial recognition technology. Other products include the IdeaPad tablets, the LePhone smartphone (sold in China), and the LeTV smart television, released in 2012.
In 2011, Liu went into “honorary retirement” but remained the chair of Legend Holdings, Lenovo's parent company, and continues to control multiple information technology (IT) companies and venture capital groups. He stepped down as chair the following year, but continues to be involved in the company. He is considered one of the most powerful businesspeople not only in China but also in the world. In his so-called retirement he has focused on diversifying Legend Holdings and enhancing its non-IT assets, including real estate, coal, and agricultural business. He also worked on taking the company public, spearheading an initial public offering in 2015. The company remained the world's largest computer manufacturer in the world by units sold as of 2024.
Personal Life
Liu is married and has three children. His daughter, Liu Qing, is president of Didi Chuxing, creators of China's biggest taxi app. He lives in Beijing.
Bibliography
Chen, George. "At 71, Lenovo's Liu Chuanzhi Is Still a Legend in the World of Chinese Business." South China Morning Post. South China Morning Post, 28 June 2015. Web. 28 Sept. 2015.
"Gartner Says Worldwide PC Shipments Increased 0.3% in Fourth Quarter of 2023 but Declined 14.8% for the Year." Gartner, 10 Jan. 2024, www.gartner.com/en/newsroom/press-releases/01-10-2024-gartner-says-worldwide-pc-shipments-increased-zero-point-three-percent-in-fourth-quarter-of-2023-but-declined-fourteen-point-eight-percent-for-the-year. Accessed 8 Mar. 2024.
Huang, Yasheng. Capitalism with Chinese Characteristics. Cambridge: Cambridge UP, 2008. Print.
Kynge, James. China Shakes the World. Boston: Mariner, 2007. Print.
"Liu Chuanzhi: Godfather of Chinese Private Entrepreneurs." China Entrepreneur Club. China Entrepreneur Club, 13 July 2015. Web. 28 Sept. 2015.
"A Torch-Bearer for Chinese Capitalism." Economist. Economist Newspaper, 20 June 2015. Web. 28 Sept. 2015.
Zhijun, Ling. The Lenovo Affair: The Growth of China's Computer Giant and Its Takeover of IBM-PC. New York: Wiley, 2006. Print.