In a recent interview the recently retired CEO of IBM, Samuel J. Palmisano revealed why the company had to sell of the very successful PC division of the company to Lenovo. The sale, which took place in 2004, was actually an attempt to satisfy the Chinese government.
After taking the position of CEO, Palmisano realised that the particular division has little scope for any new innovation and it is best to sell it off as it was giving lower profits compared to other divisions. However, this decision was criticised by many as the division was still making profit for the company.
The former CEO stated that the company received offers from Dell and many other private equity firms but ultimately it was Lenovo who bagged the deal - simply because it is based in China and through this sell IBM could enter into the lucrative market of China, reported The Verge.
Through the sale IBM "enhanced its stature" in the Chinese market and in this market, government approval for any firm plays very important role. The sell was expected to put a good impression on the government of China.
Lenovo is currently the second largest PC supplier in the world and Government of China is enjoying the benefits as it holds stake in the company.