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Chinese Computer Maker Buys IBM's PC Business


U.S. technology giant IBM is selling its personal computing business to China's biggest P.C. maker. The deal highlights China's growing economic clout and global reach.

China's largest computer maker, Lenovo, says it bought IBM's personal computer manufacturing business for $1.25 billion.

After 13 months of intense negotiations, Lenovo emerges as the third largest P.C. maker in the world, behind Dell and Hewlett-Packard.

The deal, announced Wednesday, effectively ends IBM's manufacturing of personal computers, a field the company helped pioneer in 1981.

Stephen Ward, an IBM senior vice president, will leave the company to head the restructured Lenovo, which will move its headquarters from Beijing to New York.

Mr. Ward said Wednesday the deal will extend Lenovo's commercial reach well beyond China's borders.

"The relationship with Lenovo is one that expands the opportunities for our employees by having a broader set of products that can be sold around the world," he said.

Market analysts say the deal is a sign of things to come.

Even as U.S. companies rush into China, leading Chinese businesses are getting ready to compete in Western markets.

Martin Gillaland, an analyst in Singapore with the technology research firm Gartner, says Chinese corporations are building ties with Western companies to gain competitive technology and management skills.

"This is an important step toward creating an economic superpower," he noted. "They can't be a market that relies solely on the local market, they have to compete and develop skills to compete outside of China and this sort of trend is important for that."

He says Lenovo effectively bought IBM's decades of global experience and avoided having to develop its own international business model.

Lenovo now controls an estimated nine percent of the world market for personal computers.

IBM holds a minority stake in the Lenovo venture but will refocus on the more profitable service and software industries.