IBM is shutting down its research and development (R&D) operations in China, closing its related departments and as a result laying off more than 1,000 employees in the country.
So, another American company is pulling out of China, amid tensions between Washington and Beijing. IBM’s layoffs aren’t the only changes that have affected Chinese employees recently. In May, offered Microsoft to relocate Chinese employees working in its cloud and AI division (as the US increasingly restricts China’s access to “sensitive” technologies). The company had earlier also shut down its LinkedIn website in the country.
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IBM executive Jack Hergenrother reportedly justified the layoffs in China by citing tougher competition . He said the company's infrastructure in China was shrinking and that the group was shifting research and development work closer to customers outside the country.
“In recent years, IBM has been steadily reducing its presence — it’s part of a disconnect,” said one former employee.
The US technology company has also cut staff in other regions to boost performance. Sales in China fell by almost 20% in 2023 compared to 2022.
Some IBM employees in China had the option to relocate and work for the company in other countries, while others were laid off.
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In 2021, the American group had also closed another major R&D unit, the China Research Lab based in Beijing.
Another former employee noted that IBM's China business was facing several challenges. "Just like it sold the ThinkPad [laptop] business to Lenovo, now it has to close CDL and CSL. The businesses weren't making good profits," the person said.
IBM clarified that its moves are deliberate and that it is adjusting its operations to better serve customers. “These changes will not impact our ability to support customers across the Greater China region,” the American company explained.
As we continue to see changes and developments in the global technology, it is clear that this decision by IBM will have a significant impact on the economies and technological developments of both countries. Whether this move will prove beneficial for IBM in the long run, only time will tell.
Overall, the future of US-China technology partnerships remains uncertain, but it is clear that both countries will continue to play a significant role in shaping the global technology landscape.
Source: www.ft.com
