Lenovo's mobile chief steps down amid slowdown in Chinese smartphone market

Lenovo's mobile chief is stepping down from his role amid a slowdown in the Chinese smartphone market and a push from Lenovo to expand its online sales presence.

In a statement, Lenovo said that Liu Jun, executive vice president of Lenovo's Mobile Business Group and chairman of the Motorola Mobility management board, will step down from those roles and become a special consultant to Lenovo CEO Yang Yuanqing on mobile business and strategy. Lenovo did not say why Liu is leaving his role but said he has the company's "greatest respect and gratitude for his long, productive and successful service to Lenovo."

Lenovo said that Chen Xudong, the leader of Lenvoo's ShenQi mobile unit focused on selling phones through e-commerce sites, will become the new leader of the mobile group and also chairman of Motorola.

Under Liu, Lenovo increased its stature to become the world's No. 3 smartphone player behind distantly trailing Samsung Electronics and Apple (NASDAQ: AAPL). Lenovo's deal for Motorola last fall, which Liu helped close, will let the company expand its presence in the Americas and Western Europe to complement its strengths in China, other parts of Asia and Eastern Europe.

Chen, 47, joined Lenovo in 1993 and before his ShenQi role, he served as president of China for five years, and helped grow Lenovo's China PC market share from 26 percent to 36 percent as profit doubled. Chen will become co-chairman of ShenQi with George He. Edward Chang, currently vice president of ShenQi, will become the CEO of the unit.

Lenovo said quarterly sales were $2.8 billion in the company's mobile business group, which includes products from Motorola, Lenovo-branded phones, Android tablets and smart TVs. Overall, the company shipped 18.7 million smartphones in the quarter, up 49 percent from a year ago. Notably, Lenovo said Motorola-branded smartphone volumes grew 23.6 percent to 7.9 million units in the first quarter. Motorola added $1.8 billion to Lenovo's mobile revenues in the quarter, the company said. Motorola hit a major milestone by re-entering the Chinese smartphone market in January and it remains on track to be profitable by late 2015 or early 2016, the company said.

However, China's smartphone market contracted for the first time in six years, with both Lenovo and combined Lenovo-Motorola losing share, research firm IDC reported earlier this month. Lenovo was still the world's No. 3 smartphone player in the first quarter, according to IDC.

Speaking to reporters last month, Yang acknowledged Lenovo's smartphone business was struggling in China amid a slowing market and intense competition. According to Reuters, Yang said the company needed to improve profitability in China after the smartphone division's performance hurt Lenovo's overall operating margin in China.

"We have encountered bigger challenges in China during the past few years," he said. "Our advantage was at the carriers sales channels in the past, but now we need to rebuild our retail and online sales channels."

For more:
- see this Lenovo release
- see this WSJ article (sub. req.)
- see this SlashGear article

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