Lenovo factory highlights Wuhan threat

A trip to the Lenovo factory in Wuhan, China, was a reminder of the impact of scale in high-tech, writes ARTHUR GOLDSTUCK.

Most Westerners have never heard of Wuhan, but this city of 10-million is the economic capital of central China, and has quietly been building that country’s own version of Silicon Valley. Lying at the intersection of the Yangtze and Han rivers, the high-tech hub is called Optics Valley of China. What it may lack in originality, it more than makes up for in potential.

Last year enterprises based in Optics Valley generated income of more than 650-billion Yuan – that’s just over a billion dollars – and it’s growing at 30% a year. They filed 10 000 patent applications in 2013, and their talent pool is fed by 52 local colleges and universities. Its 1,2-million students give Wuhan the largest student body in China – and produces 200 000 graduates a year.

Throw into this mix an annual Government grant of more than 2-billion Yuan to support independent innovation and enterprise development, and you begin to get a sense of the scale of what is likely to emerge from Wuhan in the near future. You also realise just what impact such scale can make on an industry.

Right now, Wuhan is both China’s main producer of fibre optic materials, and home to the world’s largest desktop computer production facility. Owned by Foxconn, that facility is called the Wuhan Science & Technology Park, and accounts for more than half of global production of desktop PCs. With Foxconn regarded as the home of generic devices, however, that honour didn’t draw much attention to Wuhan itself. But the arrival of Lenovo has changed things, with the construction of its Wuhan Industrial Base. It is the heart of Lenovo’s Mobility Business Group, responsible for the company’s smartphones and tablets.

Significantly, it is not only a production facility: it hosts research and development too, along with marketing for mobile devices. Lenovo last year became the world’s biggest manufacturer of traditional computers – desktop and notebook machines. Speaking in Wuhan last week, chairman and CEO Yuanqing Yang stated a clear intention of adding tablets to this leadership in the short term, and smartphones in the long term.

The high-tech factories are at the heart of Lenovo’s competiveness.

According to Aymar de Lencquesaing, president for Lenovo’s Europe, Middle East and Africa region, Lenovo bucked the trend a decade ago for hardware manufacturers to go “fabless” – disposing of their fabrication capacity. By outsourcing, they improved their balance sheets, but lost the ability to innovate.

Lenovo kept their factories and, in hindsight, that proved to be a very smart deal. Sometimes innovation can be very simple, like the Yoga notebook. Experimenting with a simple hinge mechanism has regenerated a product category, the clamshell notebook, that has been the same for the past 25 years.

In Lenovo’s factory, the production lines are vast, efficient, and clinically clean. Testing chambers that would not look out of place at a NASA space centre push devices to extremes of endurance. Unseen elsewhere in the complex, research teams work on ideas small and large that the world may never see, and some that could change the world.

Now do the arithmetic for the whole of Wuhan, where five new enterprises open every single day: Multiply small ideas by big factories by exploding innovation. Multiply the result by a further three or four years, and Wuhan will be on everyone’s high-tech radar.

Monitoring production at the Lenovo factory in Wuhan. PIC: Arthur Goldstuck

* Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee