IBM cuts back on R&D in China as Beijing pushes local tech firms amid US-China tensions. Over 1,000 jobs impacted, with most operations shutting down.
BM, the American technology giant, is scaling back its research and development (R&D) efforts in China as Beijing's government directs local authorities and state-controlled entities to favor Chinese technology companies. This decision comes amid escalating tensions between the U.S. and China, especially in the tech sector.
Impact on IBM's Chinese Workforce
According to sources within IBM's Chinese branch, the company will lay off more than 1,000 employees from its current workforce of approximately 7,500. The downsizing will leave only two offices operational: the China Development Lab and the China Systems Lab. While some employees have been offered relocation opportunities to other countries, others are being provided with financial compensation.
Declining Sales and Global Context
IBM's decision is also influenced by declining sales in the Chinese market. From 2022 to 2023, the company's sales in China fell by nearly 20%. Furthermore, the Asia-Pacific region contributed to just 10% of IBM's global revenue, which totaled $62 billion. This reduction in the Chinese market's significance reflects broader challenges faced by American tech firms in China.
Broader Industry Trends
IBM's move follows similar actions by other American tech companies. In May, Microsoft offered to relocate hundreds of Chinese employees working in cloud computing and artificial intelligence as the U.S. continues to restrict China's access to sensitive technologies. Previously, Microsoft had shut down its LinkedIn service in China, citing increasing challenges.
IBM's substantial reduction in its R&D presence in China highlights the growing impact of geopolitical tensions on global technology companies. As Beijing favors local firms, and Washington tightens restrictions, the landscape for international tech giants in China continues to shift dramatically.
Source: Financial Times
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