Answers For Lenovo’s Loss and Yang Yuanqing’s Sky-high Salary

摘要: “A seasoned CEO must have a level of endurance.”

(Chinese Version)

In early 2016, Yang Yuanqing was under mass criticisms. On February 20th on the Yabuli Conference, Yang Yuanqing for the first time answered all the worries and doubts out there and explained the incentives for Liu Chuanzhi’s decision of choosing him. Additionally, Yang made it clear that Lenovo Group’s main businesses were not losing money. Furthermore, Yang pointed out that if MOTO, the phone department Lenovo acquired, continues to operate in the current way, it will keep losing money.

Recently, Yang Yuanqing appeared on Meet With The Industry Leaders, a TV show from CCTV Finance, on which Yang stated that it’s normal to get opinions, criticisms, and suggestions from the general public and that CEOs must have the patience and endurance to cope with rumors. Additionally, Yang Yuanqing once again explained the loss of USD 714 million in the quarterly fiscal report released in November last year as well as the acquisition of Motorola.

“In my opinion, whether it’s the acquisition of Motorola or IBM servers, are both part of our plan. We acquired Motorola because the phone making is an industry with a scale. Now the biggest obstacle that is holding the phone industry back is the issue of patents. According to our assessment, if we didn’t acquire Motorola, we would have to pay the third party at least an extra 20% patent fee. It’s true that there have been doubts about the loss mentioned in our Q3 fiscal report. Now I want to make it clear that such loss isn’t unexpected. If you want to lay off your staff in the U.S, then you have to transfer some of the functions back to China so as to integrate them with the teams in China. You have to compensate the staff you are going to lay off.”

Furthermore, when Lenovo’s performance was declining drastically, Yang Yuanqing topped the 2015 Annual Salary Chart of CEOS of listed companies with the amount of 118 million RMB. Faced with doubts and criticisms, Yang Yuanqing made the following explanation:

Since the staff in China has pretty low salary while the staff from the companies we acquired in the U.S has a salary level in accordance with the American standard, I myself can’t have a salary that’s lower than the American staff. Our board has a compensation committee and we have hired Towers Watson to consult issues concerning the salary of the staff in the company. What I am trying to say here is that it’s not me that decide how much people get. We have a framework for that, a standard framework that determines the salary level. We refer to the salary level of similar companies in scale. That’s how we set up the salary framework.

Even so, I am aware that people tend to compare my salary to that of other CEOs in China. In this case, in recent years most people only noticed my relatively high salary and neglected the fact that I would give out a proportion of my salary to junior employees.

In the interview, Yang Yuanqing revealed that he’s running a weibo page and then became the Esquire of the year because it’s beneficial for the company. When it’s necessary, he would have to jump out of his comfort zone and do a lot of things that he is not good at. For example, he has been working out and practicing his communication skills to better serve the company’s needs. “Some journalists said that in the past I would even stutter during the interview,” Yang said.

When asked about his future plan if he were to leave his current position, Yang Yuanqing said that he would like to spend more time with his friends. “I have told Liu once that I might open a restaurant or something. I believe I can make it work. Making something people like is also a challenging goal for me. A big career success is not the only drive I have,” Yang answered.

What follows is the transcript of Meet With The Industry Leaders’ interview with Yang Yuanqing, held by CCTV:

Shi Xiaonuo: Do you get the feeling like the pressure you are under is increasing ever since entering the monkey year? For example, recently you have been quite a center of public attention and there have been many opinions. How will you respond to those opinions?

Yang Yuanqing: I think it’s normal for public figures to have nice comments, suggestions as well as harsh criticisms from the public. A seasoned CEO must have a level of endurance. I have been a CEO for 16 years. I have my ups and downs along the journey. I would try to understand all those kind comments and suggestions and become smarter for that. As for those ridiculous attacks and rumors, I would just ignore them.

Shi Xiaonuo: You graduated from the University of Science and Technology of China so I assume you keep a low profile in life just like other people that have studied science and technologies. But from what I heard from the PR department, it seems that you have been quite active on Weibo for your company. And I also learned that you went to be the Esquire at that time as well. You will do anything that will benefit Lenovo’s products. So what’s the real you?

Yang Yuanqing: It’s pretty struggling for me. To be honest I am not good at making speeches. Jack Ma and Liu are so much better than me. Some journalists said that in the past I would even stutter during the interview. So in this case I am not doing things I like. But I like to challenge myself. And more importantly, I am doing it for my company, for Lenovo. In my mind this is a responsibility that I need to take. If the company needs us to do something, the market needs us to do something, or the users need us to do something, then we will have to jump out of our comfort zone and just make it work.

Yang Yuanqing: The salespeople nowadays have much easier jobs to do than in the past. The salespeople back then had to do anything. From handing in the money to the accounting department after each purchase, picking up the products at the warehouse, product delivery, to aftersales service, were all part of a salesperson’s jobs. And if it’s payment by installment, the salesperson would have to keep an eye on the customer and constantly inform him or her to pay the bill.

Shi Xiaonuo: As a top school graduate like, how did you feel about being a salesperson? I assume you didn't like it, right? You don’t have the salesperson personality.

Yang Yuanqing: Yes.

Shi Xiaonuo: You don't have the personality for a salesperson.

Yang Yuanqing: To be honest I didn’t want to take that job.

Shi Xiaonuo: But did you do a good job?

Yang Yuanqing: I did well, pretty well. If not I would not be able to have any promotion. And the truth is, just like you have said before, I didn’t come to be a salesperson. I just like to challenge myself, and I want to do everything well.

Shi Xiaonuo: Some people say that Motorola was a business line that Google wanted to get rid of, which makes it seem that it isn’t smart to acquire that brand. What’s your response?

Yang Yuanqing: In my opinion, whether it’s the acquisition of Motorola or IBM servers, are both part of our plan. We acquired Motorola because the phone making is an industry with a scale. Now the biggest obstacle that is holding the phone industry back is the issue of patents. According to our assessment, if we didn’t acquire Motorola, we would have to pay the third party at least an extra 20% patent fee. It’s true that there have been doubts about the loss mentioned in our Q3 fiscal report. Now I want to make it clear that such loss isn’t unexpected. If you want to lay off your staff in the U.S, then you have to transfer some of the functions back to China so as to integrate them with the teams in China. You have to compensate the staff you are going to lay off.

Shi Xiaonuo: You can actually calculate the expense?

Yang Yuanqing: Yes, this expense can actually be calculated out. Every business has its twists and turns. When the situation is bad your performance would be affected, and you have to be prepared for it.

Yang Yuanqing: I think the very core issue here is the salary, that’s the thing that everyone cares about. But many people might not really know about Lenovo’s system. In fact after we acquired IBM’s PC department, the issue of the salary system had been quite a headache for us, since the staff in China has pretty low salary while the staff from the companies we acquired in the U.S has a salary level in accordance with the American standard, I myself can’t have a salary that’s lower than the American staff.

Our board has a compensation committee and we have hired Towers Watson to consult issues concerning the salary of the staff in the company. What I am trying to say here is that it’s not me that decide how much people get. We have a framework for that, a standard framework that determines the salary level. We refer to the salary level of similar companies in scale. That’s how we set up the salary framework. Even so, I am aware that people tend to compare my salary to that of other CEOs in China. In this case, in recent years most people only noticed my relatively high salary and neglected the fact that I would give out a proportion of my salary to junior employees.

Shi Xiaonuo: Share repurchase?

Yang Yuanqing: No, I just allocate it to the bottom staff. I have been doing this for years. But this year I donated 10 million RMB to Shanghai Jiao Tong University. Besides that, I also donated a foundation to the University of North Carolina to help the research in cancer prevention and curing cancer. Additionally, Lenovo’s salary is not set, it’s performance oriented. If next year people find that my salary is lower than previous years, it’s probably our performance this year is not very satisfying. I hope that people will understand this.

Shi Xiaonuo: There have been comments saying that Lenovo has missed some of the opportunities in the mobile Internet era. Do you agree?

Yang Yuanqing: We believe that whether it’s in the Internet era or the mobile Internet era, our aim is not to become the next Baidu, Alibaba, or Tencent. We want to be Lenovo. In the Internet era, we were able to provide competitive personal computers for consumers. I believe we are also able to make products suited for the consumers nowadays.

Shi Xiaonuo: Last year the mobile department was undergoing some major changes of personnel. I heard that you said the mobile department was acting so slow that Lenovo missed many opportunities. Is that correct?

Yang Yuanqing: That’s right.

Shi Xiaonuo: When you are criticizing people, will you yell at them? Will you be extremely angry? I ask this because I can tell the employees are quite tense.

Yang Yuanqing: Yes. To be specific, I am a pretty strict person at work. Facing challenges presented by other Internet companies and new business models, we have to possess the ability to adapt to the changing situation. If we move slowly it will bring devastating consequences to our company. Therefore I have always encouraged my team to adapt quickly to the trend and act fast.

Shi Xiaonuo: I remember two days ago you said on an occasion that Lenovo will make a good turn in the Chinese market.

Yang Yuanqing: Yes. We will surely make a good fight and win in the smart phone line.

Shi Xiaonuo: Your have a personality of a gladiator according to Liu. Are you always like this? You never give up?

Yang Yuanqing: I am like that I guess. Liu always said that when I was first in charge of Lenovo’s PC business I was very aggressive. I only wanted to make it work you know, so I didn’t pay much attention to other things. Liu gave me guidance afterwards. He taught me how to do a good job in business without compromising other things. I learned from him that sometimes I would need to make compromise. In this sense I benefited a lot from Liu.

Shi Xiaonuo: Have you thought about your future plan after this job? Any idea? Do you have any other goals?

Yang Yuanqing: I will spend more time with my friends. I have told Liu once that I might open a restaurant or something. I believe I can make it work. Making something people like is also a challenging goal for me. A big career success is not the only drive I have.

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[The article is published and edited with authorization from the author @TMTpost, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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