IBM Cuts 1,000 Jobs in China

THE IBM is cutting more than 1,000 jobs in China amidst increasing tensions between Washington and Beijing.

The decision comes in a context of deteriorating relations between the United States and China, especially in areas of high technology as artificial intelligence and green technology.

The company announced the closure of its research laboratories in the country, including the historic China Development Lab and the China Systems Lab.

This move reflects the growing difficulties for US companies to operate in the world's second-largest economy.

IBM Cuts Jobs in China Amid Geopolitical Tension

Job Cuts and Laboratory Closures

IBM has announced the resignation of over 1,000 employees in China, as reported by Chinese state media. This move comes amid growing geopolitical tension between Beijing and Washington, leading many global companies to reconsider their operations in the world's second-largest economy.

Impacts of Geopolitical Tension

The relationships between the United States and the China have deteriorated, especially in high-tech areas such as artificial intelligence and green technology. National security concerns have been a key factor, resulting in layoffs and quiet reassignments of employees by several companies.

Closure of Research Laboratories

The Chinese state financial website Yicai reported that IBM is completely closing its research operations in China, including the China Development Lab and the China Systems Lab, both long-standing establishments in the country. IBM, in a statement to CNN International, declined to comment on the exact number of layoffs or whether it will retain any research staff in China.

IBM Official Statements

IBM said it is adapting its operations as needed to better serve its customers and that these changes will not impact its ability to support the Greater China region. Despite this, the reality of the Chinese market is becoming increasingly challenging for Western companies.

Decline of Infrastructure Business

Jack Hergenrother, an IBM enterprise systems development executive, told the team that the company's infrastructure business in China is in decline. Research work will be transferred to other labs, possibly in India, as reported by Wall Street Journal.

IBM's History in China

IBM has a long history in China, beginning in 1934 with a supply of machines to a major hospital in Beijing. After returning to the market in 1984, IBM saw China as a priority with enormous potential. However, in recent years, that enthusiasm has waned as the technology war between the world’s two largest economic powers intensifies.

Restricted Market Access

David Hoffman, senior consultant at Conference Board Asia, highlighted that market access for Western companies is restricting, especially in enterprise IT sectors, where large state-owned companies dominate the market.

Focus on Hybrid Cloud Technologies and AI

IBM mentioned that Chinese companies, especially private ones, are increasingly focusing on technology hybrid cloud and artificial intelligence. IBM's strategy is to address these opportunities despite growing difficulties in the Chinese market.

Drop in Revenue

IBM reported a 19.6% drop in revenue in China last year, reflecting the difficulties faced by several industries in the country. IBM's news follows confirmation that Microsoft also offered to relocate some of its employees to China.

Challenges Faced by Microsoft

Just like IBM, Microsoft has worked hard to build goodwill in China. However, the company also faces challenges due to geopolitics, which cloud the business outlook for American companies working on AI and cloud computing research in China.

Chinese Incentives and IP Risks

Anne Stevenson-Yang, co-founder of J Capital Research, mentioned that many US companies were attracted by Chinese incentives and bureaucratic red tape to move research to the country. However, political risk and intellectual property risk are reversing this trend.

Frequently Asked Questions

Why is IBM cutting jobs in China?

IBM is cutting jobs due to geopolitical tension between China and the US and falling revenue in the country.

How many jobs are being cut by IBM in China?

IBM is cutting more than 1,000 jobs, according to reports in Chinese state media.

Which IBM labs will be closed in China?

The China Development Lab and the China Systems Lab will be closed.

What impact do these layoffs have on IBM clients in China?

IBM said these changes will not affect its ability to provide support in the Greater China region.

Where will IBM's research work move?

Some of the research work may be transferred to IBM laboratories in India.