The still unnamed company will help Lenovo "attack the fast-growing consumer mobile device market in China," Lenovo said in a statement Wednesday.
Competitor Xiaomi was not named. But the new Lenovo company will operate with what sounds like a similar business model, according to details provided in the announcement.
Like Xiaomi, which has cultivated a huge fan base in China through its own website and social networking services, Lenovo's new company will also focus on "close customer engagement".
Sales, marketing and even product development by the company will rely on an "Internet-based business model," Lenovo added in its statement.
Lenovo already has a thriving handset business in China that in the second quarter was about neck and neck with Xiaomi for the top spot in the country's smartphone market, according to estimates from research firm Canalys and IDC.