Dun & Bradstreet’s Sam Tidswell-Norrish spoke with Lei Chen, Chief Credit Officer at Lenovo Group who discussed managing trade credit and supply chains on a global scale, the impact of COVID-19 and the importance of culture in business.
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Excerpt: Lenovo’s Priorities during the Pandemic: Protect Employees, Customers and Cash Flow.
Sam Tidswell-Norrish: “Your customers have come to rely on you and it’s all about being a leader. And leadership is a paramount importance at a time like this. And you know, I’d be remiss not to make mention of the macro situation we’re faced with at the moment with COVID-19. Lenovo has a duty to its customers, its customers who rely on Lenovo infrastructure. What have been the key priorities for you guys, as you work your way through this situation. How are you keeping your business continuity plans in place and making sure that you deliver for those that trust and rely on?”
Lei Chen: “You’re absolutely right. This is the, currently the top priority of a whole company. Our strategy is to go back to basics and prepare for the future. What is back to basics?
So, the first priority is to protect our employee, protect the people, you know, keep safe and keep healthy. You know without employees we are nothing, yeah. So we rely on our employees and this is our priority one. Another, exactly, customers. Protect our customers and especially to capture the customer needs demanding. Actually, for our industry, for the PCs, we find the customer demand increased due to the COVID-19 spread due to the lockdown, because, one, more people need the work from home or study from home. So they don’t just need one laptop they need two or three laptop and the desktop is a machine to empower your efficiency. It’s a working machine is not like a smartphone, smartphone is a machine for entertainment. That’s okay, but if you want to work from home I believe, laptop will be more efficient. So that’s why we find out our demand for our customers in this quarter actually increased, so you’re absolutely right how can we support our customers, this is essential. So, we need to ensure our supplies and our deliveries, our service, our logistics, everything, not to be interrupted.
The third basic things, related to my function, is to protect our cash flow. Protect our cash flow, that means we should collect on time, and also reduce non-essential expense, reduce capex. Now all the capex are under review of a co-controller, they are priorities. We suspend all unnecessary spending and all the travel also are canceled, and also the new hiring suspended, and also for corporate, our annual merit, and the promotion, will be suspended for next year. So basically, we also tighten control our expense and know our expense and to improve the efficiency.
So this is back to the basics, to support our customers. Because to be honest, I believe you know, currently nobody can say, the country lockdown whether or not the situation will get better in June or in next quarter. Nobody, nobody can give certain answers. It depends on how the global pandemic contained and whether we can have a vaccine, when can we have the vaccine. But we do see the new opportunities so we need to also find out the new opportunities. Because companies realize they should work remotely.
So that’s not just demand of laptop, also servers, also cloud computing, all kinds of things. And also more the commercial, I believe all commercial demand will come after the COVID-19, that’s to transform their company, to digitalization and the intelligences. So I believe there will be opportunities after COVID-19. But first we need to ensure we will survive.
To reinvest, we will not lose our cash and our customers, our manufacturer capacities, then prepare for the opportunity. I can give you an example, in Japan, Ministry of Education in Japan, they have a plan to give each Primary School students a laptop. It used to be a three-year project. So that means from this year to 2024. Now, I believe probably in order to stimulate the economy, they have speeded this project to one and a half year, so the additional budget to the schools. That means for our customers, I need to double or even triple their credit limit. So it’s very exciting for credit, we have a new business but also challenging if we double a credit limit for one distributor, even if it’s our big distributor.”
End of Excerpt
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