Case Study of a Successful M&A—The Role of Communication in Lenovo’s Acquisition of IBM PC

Lenovo management quickly learned that communication would be a key to successful integration. The combined company decided to make English the official language. Other communication issues, ranging from information availability to communication style, emerged as potential obstacles. The new management team recognized these issues and took proactive steps to help the entire organization learn and adapt to new communication styles and reduce misunderstandings.

Information Availability

 Openness. As Lenovo began its integration with IBM PC, early misunderstandings alerted leaders that clear communication would be critical to the acquisition’s success. The reality of integration required all workers to start at “ground zero,” meaning they were to avoid overvaluing past personal successes and instead focus on current issues.1 Thus, integration was purposefully set at a cautious pace.

Through this process, Lenovo placed priority on transparency and openness.  For example, Lenovo announced that compensation would continue as previously set and that there would be more opportunities for promotions. Clear and timely communication of this sort was intended to put employee concerns at ease.2 Other effective actions included encouraging senior vice presidents to communicate directly with the HR department—an unusual practice in the corporate world—as well as carry out executive retreats focused on open, sometimes brutally honest discussions of company issues.3

Language Barriers . Communication is severely inhibited in the presence of a language barrier. Lenovo set out to approach this difficulty head on. Soon after acquiring the IBM division, Lenovo established English as the official language of the whole company and encouraged employees at all locations to use it on a daily basis. The company began sponsoring English lessons at a training center to allow Chinese employees to improve their English abilities to better comply with this goal. As one Chinese executive said, “You know, our English was not very good at the beginning…then the company sponsored us to learn English at a training centre… now we can frequently deal with daily operations in English.”4 As time has passed, this language issue has been lessened at least to a degree, although it still causes some difficulties for non-proficient executives.5 In exchange, many English-speakers attempted to learn at least a few Chinese words. This is an act that demonstrates respect for foreign counterparts in any cross-boarder situation: “You do not have to learn an entire language. Phrases such as ‘hello’, ‘how are you’ and ‘please’ and ‘thank you’ are a real help in making the right impression.”6

However, it should be noted that even when both sides did understand the same words, there were still miscommunications based on different contextual meanings. One misunderstanding originated in the definition of “workers’ unions.” To the Chinese, the word simply meant workers’ councils that occasionally set up employee activities, while to the Americans, it meant strong political groups that had to be negotiated with.7 This definitional language barrier required patience and explanation when there were points of misunderstanding.

Communication Style

High Context vs. Low Context. High vs low context communication styles can be particularly troublesome between Chinese and U.S. employees since the two countries have very opposite styles. In fact, the U.S. is considered to be the lowest context culture in the world, meaning that communication is straightforward, literal, and repetitious. China is the opposite; the Chinese tend to use hidden meanings and contextual references.8

These contrasting communication techniques are taught in early childhood. Americans are often instructed that an effective presenter must “Tell them what you are going to tell them, then tell them, then tell them what you’ve told them.”9  On the other side of the world, Chinese children are taught to “read the air” of a conversation: “In Chinese culture, pang quao ce ji [beating around the bush] is a style that nurtures an implicit understanding. In Chinese culture, children are taught not to just hear the explicit words but also to focus on how something is said, and on what is not said.”10

Western Lenovo employees explained frustration with this difference: “When [the Chinese] say ‘yes’ they mean they understand, not that they agree.”11 This tendency confused Americans since to them, “yes” was understood as unambiguous agreement.

Principles Based vs. Applications Based. “Principles Based” cultures prefer to view situations first in a broad, “big picture” perspective. Alternatively, “Applications Based” cultures seek first to see ideas in action through specific examples.12 As Meyer phrases it, “Chinese people think from macro to micro, whereas Western people think from micro to macro” (111).

Lenovo management quickly realized this difference in perspective:

…Many Eastern colleagues [felt] that their Western counterparts were discussing only one case and not seeing the larger context, while many Westerners felt that the Easterners were less interested in solving the immediate problem. We started incorporating ways to do both: define the problem in a particular case and explain why it was important and relevant. Not only did this make collaboration much easier, it also helped both sides have a fuller and more detailed understanding of an issue, leading to better decision making for both the short and the long term.13

Lenovo’s understanding of this cultural differences allowed them to make the needed adjustments in order to proceed with intelligent decision making.

Direct vs. Indirect Negative Feedback. Although not nearly the most direct of the world’s countries, by comparison to China the U.S. is relatively more direct in its approach to negative feedback. To Chinese ears, a more straight-forward American approach could come off as harsh or insensitive.14 The Chinese prefer an indirect, softened communication style. For example, an American Lenovo executive described a Chinese employee beginning a conversation with many compliments, such as “you are a very nice person,” “you are kind,” and “your intentions are good,” before even beginning her actual purpose of breaking bad news regarding some human resource issues.15

It should be understood that “Using the word disagree comes across as too strong to the Chinese, and is also considered disrespectful. In general, when you don’t agree with someone, the matter must be handled with the utmost sensitivity. The Chinese call this ‘saving face.’”16 This means avoiding actions that could cause them to be embarrassed or dishonored. Gaining or losing “face” could occur through “their own actions, public knowledge of their actions, showing respect for others, compliments or criticism from third parties, mistakes (making them or avoiding them), experience, and age.”17 Thus, U.S. Lenovo employees had to learn the art of “saving face” in intercultural interactions.

It should be noted that language barriers complicate this element. As employee Gina Qiao stated, “While we Chinese can be sensitive about many things, sometimes we come across as a little too direct in translation. This stems partly from the structure of our language, which conveys information in fewer words, without all the preamble and poetry of English.”18 Thus, the distortions caused by translation must also be considered in order to communicate appropriately and avoid causing offense.

Mannerisms. The Chinese tend to use body language that can be hard for Westerners to comprehend: “Westerners sometimes have difficulty understanding this aspect of the Chinese culture, and may interpret nodding of the head as an affirmation, when in fact it is not […] Visitors would be wise to pay attention to key nonverbal clues such as the breaking of eye contact, looking down, or any hesitation to discuss an issue when a topic is brought up.”19

Lenovo employees experienced this variety of misunderstanding when initially beginning work between the American and Chinese cultures:

In the meetings, the American staffs like to express their ideas, especially when decisions need to be made…while the Chinese employees always keep silence… In American culture, if you don’t express your idea, people assume you agree with the decision, and the proposal would be passed… However, in Chinese culture, if you keep silence, that means you don’t agree… so at the beginning, we have made a few wrong decisions in joint meetings due to cultural differences.20

Silence for Chinese can mean thinking or doubt, while Americans are accustomed to interpreting the silence as either unanimous agreement or an awkward pause. Another Chinese manager complained: “I used to find it hard to get a word in on conference calls with American colleagues. … They’d say ‘I’m thinking out loud,’ but they aren’t thinking—they are speaking.” Lenovo encouraged workers to slow down the pace of meetings to allow for equal participation, as well as to seek first to understand and then be heard.21

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  1. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. 53
  2. Zhou, S. & Huang, X. (2014). HOW CHINESE “SNAKE” SWALLOWS WESTERN “ELEPHANT”: A CASE STUDY OF LENOVO’S ACQUISITION OF IBM PC DIVISION. Journal of International Business and Economy 15(1): 32
  3. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. 53
  4. Zhou, S. & Huang, X. (2014). HOW CHINESE “SNAKE” SWALLOWS WESTERN “ELEPHANT”: A CASE STUDY OF LENOVO’S ACQUISITION OF IBM PC DIVISION. Journal of International Business and Economy 15(1): 38
  5. Zhou, S. & Huang, X. (2014). HOW CHINESE “SNAKE” SWALLOWS WESTERN “ELEPHANT”: A CASE STUDY OF LENOVO’S ACQUISITION OF IBM PC DIVISION. Journal of International Business and Economy 15(1): 36
  6. Bdaily. (2015). What I wish I’d known on starting exporting. Retrieved from
    http://www.chamber-international.com/news/latest-news/what-i-wish-i-d-known-on-starting-exporting/
  7. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. 58
  8. Meyer, E. (2014). The Culture Map: Breaking through the Invisible Boundaries of Global Business. New York: PublicAffairs. p. 39
  9. Meyer, E. (2014). The Culture Map: Breaking through the Invisible Boundaries of Global Business. New York: PublicAffairs. p. 35
  10. Meyer, E. (2014). The Culture Map: Breaking through the Invisible Boundaries of Global Business. New York: PublicAffairs. p. 48
  11. Connor, J., Min, Y., & Iyengar, R. (2013). When East Meets West. T+D. 67(4), 58
  12. Note: Meyer places Asian cultures on a related but distinct scale called holistic to specific, which embodies a similar concept, but emphasizes the Asian prerequisite of an all-inclusive understanding. Meyer, E. (2014). The Culture Map: Breaking through the Invisible Boundaries of Global Business. New York: PublicAffairs. p. 104.
  13. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. 112
  14. Meyer, E. (2014). The Culture Map: Breaking through the Invisible Boundaries of Global Business. New York: PublicAffairs. p. 69
  15. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. xxix
  16. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. 90
  17. Main, K. (n.d.) “China: The Business Experience.” Global Road Warrior. Retrieved from www.globalroadwarrior.com.erl.lib.byu.edu/#mode=country&regionId=32&uri=country-content&nid=13.12&key=country-business-experience
  18. Qiao, G. & Conyers, Y. (2014). The Lenovo Way: Managing a Diverse Global Company for Optimal Performance. McGraw Hill Education. p. xxxv
  19. Main, K. (n.d.) “China: The Business Experience.” Global Road Warrior. Retrieved from www.globalroadwarrior.com.erl.lib.byu.edu/#mode=country&regionId=32&uri=country-content&nid=13.12&key=country-business-experience
  20. Zhou, S. & Huang, X. (2014). HOW CHINESE “SNAKE” SWALLOWS WESTERN “ELEPHANT”: A CASE STUDY OF LENOVO’S ACQUISITION OF IBM PC DIVISION. Journal of International Business and Economy 15(1): 37
  21. Connor, J., Min, Y., & Iyengar, R. (2013). When East Meets West. T+D. 67(4), 59