Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of

MORRISVILLE, N.C. – IT and computer spending is forecast to increase rapidly over the next five years in China, , and Lenovo is positioning itself to capitalize on emerging trends.

Lenovo, the world’s No. 4 PC maker, generates a great deal of headlines worldwide for its new machines ranging from 3-D to sophisticated laptops and desktops. It is preparing to (LePad) to counter Apple’s iPad and already is selling its own smartphone (LePhone).

But Lenovo also is maintaining its focus on the homeland where it was launched 25 years ago and is the dominant player even as it 47 percent from a year ago and grew its global market share to better than 10 percent, according to analysis firm IDC. (Gartner reporter similar figures.)

A new report from forecasts IT spending in China to grow at a compounder annual growth rate of 16 percent, rising to $139.1 billion by 2014 from $86.9 billion this year.

“A number of factors, including a vast potential rural market, government spending and gradual modernization in sectors such as education, healthcare and manufacturing, will help to sustain market growth,” the company says in a summary of the report.

Hardware sales, meanwhile, are forecast to grow to $89.8 billion by 2014 from $57.1 billion this year.

So how does Lenovo, which bases its global headquarters in Morrisville, benefit?

The smartphone group was reacquired by Lenovo, and LePhone is timed to capitalize on China’s growing 3G wireless network.

Notes the report: “The roll-out of 3G mobile services by China’s mobile telecoms network operators will stimulate sales of netbooks, while government subsidy programs will boost demand from the vast, under-penetrated rural areas.”

Companiesandmarkets also forecasts small business, “smaller towns and rural areas driving growth.”

How does Lenovo benefit?

“Vendors face the challenges of geography and channel underdevelopment in China’s vast rural hinterland, where villages are often widely dispersed and far from the nearest large town,” the report says. “Vendors such as Lenovo and HP have been aggressively expanding their sales networks outside China’s largest cities.”

“Lenovo said that it aims to sell 5mn computers in rural areas and cover 320,000 villages across the country,” the report pointed out. The company is in the process of opening “700 new county-level stores in the next three years and introduce 15 new models specifically designed for the rural market.”

Companiesandmarkets notes that Lenovo is already No. 1 in China in desktop and notebook sales with a 33 percent share in notebooks alone.

Just a few days ago, Lenovo Chairman Liu Chuanzhi said of Apple and CEO Steve Jobs in an interview with the Financial Times:

“We are lucky that Steve Jobs has such a bad temper and doesn’t care about China. If Apple were to spend the same effort on the Chinese consumer as we do, we would be in trouble.”

The bet here is that Lenovo already is far along in preparing for any efforts Apple might make. The Companiesandmarkets reports that there are some 100,000 iPads already available in China and much cheaper copies are available. So the LePad comes as no surprise. Lenovo sees the threat.

Throughout the company’s reorganization last year, Lenovo management made clear that protecting the home turf remains essential even as it seeks to grow overseas.

The LePhone and the LePad are clear signs that while competition is growing in China Lenovo plans to win.

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