The founder of global computer manufacturer Lenovo Group Ltd., Liu Chuanzhi, started hinting last summer about a major company readjustment. Now, more than a year later, a new shareholding structure has emerged, and Liu is fleshing out the strategy.

Privately held China Oceanwide Holdings Group, led by Beijing billionaire Lu Zhiqiang, recently paid 2.7 billion yuan for a 29 percent stake in Lenovo's parent Legend Holdings Ltd.

Liu Chuanzhi

In a single swoop, Oceanwide became Legend's third-largest stakeholder by taking over a stake from the Chinese government's Academy of Sciences, cutting the state's share to 36 percent from 65 percent. The academy still holds the biggest stake in Legend, while an employee group remains the No. 2 shareholder.

Liu, who is also Legend's president, said the deal would have a positive impact on corporate governance and company decision-making.

Liu spoke with Caijing on September 7, three days after the stake transfer. He said he wishes Oceanwide well: "I hope they feel the company has become their own," he said. Here are additional excerpts from the interview:

Caijing: How did Legend prepare for this share transfer? What was considered in choosing an investor?

Liu: The main thing is that the new shareholder supports Legend's long-term vision, which includes making a contribution to society. If a business just looks to make profits for shareholders, making more money is enough. But if you want to grow a large company, if you have greater ambitions, then you need the understanding and support of the entire shareholder base. We hope this new, private shareholder will have that kind of farsighted vision.

Forming this new shareholder structure will provide a basis for realizing our corporate vision. At the very least, we can turn the business into an enterprise that runs like a family business without a controlling family.

Legend still has visions for the distant future, and we must work toward goals in stages, step-by-step. I think the latest development has major significance for Legend.

Going Private

Caijing: Why did you choose a private, Chinese enterprise? Why not foreign or something else?

Liu: Foreign investors (in China) are not allowed to invest in many areas, which would certainly have made doing business inconvenient.

Caijing: It seems clear you didn't want a state-owned enterprise.

Liu: I personally did not.

Caijing: As a result of equity restructuring, Legend now has better governance. How are you looking at the issue of your successor?

Liu: This is a difficult subject. I created a slogan for Legend -- creating a family-like business without a family -- which is actually included in preparations for this.

For my successor, regardless of differences in management style, one precondition is that he or she must treat the company's business as if it were his or her own. Of course, there also must be a basic cultural identification with the company. At the same time, Legend requires some sort of long-term incentive plan to guarantee incentives for management.

In short, the leadership is required to comply with a number of common core values, such as putting corporate interests first, seeking realistic goals, displaying an enterprising attitude, and being people-focused. An ability to reach consensus and working style are the next factors. We can let everyone express views and even use a partnership model to deliberate and reach decisions.

Caijing: How does Legend plan to develop going forward? How can incentives be arranged for managers at subsidiaries so that everyone is satisfied?
　　
Liu: This issue is related to property rights. I'm always considering the long-term incentives issue, and I've sought approval from the Academy of Sciences and other shareholders. After carefully considering the issue for several large subsidiaries, we'll begin to work it out. Sometimes they will be resolved together, while at other times we can resolve them one at a time.

Direct Investment

Caijing: Is resolving this problem the next major step for Legend?

Liu: It has already quietly taken place. The next big step is Legend's direct investment business. A lot of new people have come to Legend Holdings, and there will have to be an adjustment process to make sure they understand the company's style.

Caijing: The Academy of Sciences' 29 percent sale portion -- how was the structure designed? Will there be further adjustments?
　　
Liu: The academy sold 29 percent, leaving them 36 percent. This is still higher than the Legend shareholders committee's portion of 35 percent, making it a relatively large shareholder. I haven't asked for a further reduction in their holdings. This structure is quite good for Legend as we still have a lot of business to do with the government and need this sort of partnership.

Caijing: Will Oceanwide exit after a Legend IPO?

Liu: I just don't know. Lu Zhiqiang (Oceanwide's chairman) has said he is a strategic investor; pulling out part of his investment to reinvest elsewhere is his prerogative. If Oceanwide wants to sell its holding on the stock market in the future, we have no problem. If it is a direct, off-market transaction, they should seek our opinion.

Caijing: If you were to compare Legend to a large, international corporation, what would Legend's future development model most closely resemble?

Liu: If I had to make a comparison, I would say that it might resemble Cheung Kong Holdings.