The symbolism was extraordinary. Few companies are as closely identified with corporate America as IBM, and few products have been as intimately linked with a firm’s fortunes as IBM’s personal computers.

IBM, otherwise known as “Big Blue” (after the company’s corporate colour), is a business icon. Founded in 1911, it steered the world into the new age of computers in offices and homes, launching its first desktop in 1981.

There are not many people who have not been touched by its products. IBM is said to be the third-most valuable brand in the world, behind only Coca- Cola and Microsoft.

Last week, however, in a $1.75 billion (£910m) deal, IBM did the unthinkable. It sold a controlling stake in its personal-computer business to Lenovo, China’s biggest PC manufacturer. It was the equivalent of David beating Goliath. While Beijing-based Lenovo has a quarter of the Chinese market, its annual sales of just over £5.5 billion are a third of IBM’s.

But Big Blue was keen to offload a division in which it was barely making money, although it is keeping its options open by retaining a near-19% stake in the new company. Lenovo gets ownership of the well-regarded ThinkPad and ThinkCentre computer brands, and the rights to keep using the globally recognised IBM name for five years. And by then Lenovo could be a brand to rival Dell, which has risen to No 1 in the PC market.

“Lenovo could be the first global Chinese brand,” said Professor John Quelch of Harvard Business School. “The Chinese have only to look at what Samsung achieved in Korea. They came from practically nowhere to rival Sony and are now the 23rd-most valuable brand in the world. This IBM deal is a huge step forward for Lenovo but also for Chinese business.”

That opinion was endorsed by the Chinese media at Lenovo’s press conference in Beijing last week. When the company made its announcement, Chinese reporters cheered.

“The three words that have characterised the world economy in recent years have been Made In China,” said Gerard Lyons, head of research at Standard Chartered, the leading western bank in the country. “The three words that will characterise it in the coming years will be Made by China.

“Goods produced in China used to be cheap but low quality. Now they’re still cheap but they’re high quality. And the big Chinese companies want to become big global players.”

Donald Straszheim, of California-based Straszheim Global Advisors, which has offices in Beijing and Shenzhen, said the string of deals being done by Chinese firms reflected a new trend towards the country becoming “internationally acquisitive”.

“We believe this is part of China’s second phase of mergers and acquisitions,” he said. “Chinese companies are interested in buying foreign companies for their brands, distribution network, technology and management skills.”

They are doing so for several reasons. Although China is a growing consumer market of 1.3 billion people, competition is tough. Lenovo’s market share has been slipping in a market in which the $100 (£52) personal computer is the norm. “If we just focus on China, we cannot generate returns for our shareholders,” said Mary Ma, the firm’s finance director.

Deals like this also offer a quick way of acquiring market share. Lenovo would have taken years to convince computer buyers outside China that it was a viable competitor for the established names. Taking over IBM’s PC business has rocketed it into third place behind Dell and Hewlett-Packard.

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