Beijing [China], August 31 : Tech giant IBM is making preparations for minimizing business operations in China.
The current shift in IBM's business structure is reportedly due to the rising tensions between China and the US along with an ongoing decline in the Chinese economy, CNN reported quoting several local news sources.
According to report, IBM is cutting 1,000 jobs in China. Similar activities of revocation of business or relocation of operations have been witnessed by several tech companies in China. Due to deteriorating relations between both countries because of technologies like artificial intelligence (AI) and green technology, mostly due to security concerns.
Yicai, a Chinese state-owned financial media outlet according to CNN, reported on Monday that IBM was ending research operations in China entirely after 25 years, of being initiated in 1999. However, a statement by IBM quoted in the CNN report mentioned that the company declined to comment on the issue of job losses or the retaining of any research staff in China. "IBM adapts its operations as needed to best serve our clients, and these changes will not impact our ability to support clients across the Greater China region," the IBM statement said.
Jiemian, another state media outlet from China, wrote that the job cuts which would affect the staff of IBM in Beijing, Shanghai and Dalian in China were declared by Jack Hergenrother, an enterprise systems development executive from IBM.
According to the CNN report, Hergenrother had reportedly told IBM's staff that infrastructure business in China was "in decline" and the research happening in the country would be shifted to other research labs run by IBM. Meanwhile, The Wall Street Journal in a report mentioned that some of the work being relocated by IBM may be undertaken by the labs in India.
In recent years a tech war between the world's top economic powers has become severe, making it difficult for US-based tech firms to do business in China. The CNN report quoted David Hoffman, a senior advisor from Conference Board Asia saying "It's a reality that market access for Western firms is constricting, if not closing in some sectors in China due to national security concerns".
He added further in his statement that enterprises involved in IT, which refers to complex systems used by large organizations to manage operations, were one of those areas, especially because large state-owned and state-connected firms form the bulk of the market.
IBM in its most recent annual report claimed that revenue in the country fell by 19.6 percent last year. claiming that, after years of growth, China is no longer the promising land it once was for its industries.
The alleged job cuts and shift in business operations came after three months of Microsoft (MSFT) confirming that, it has offered to relocate some of its employees. The CNN report quoted a state media which had previously reported that the company had made such an offer to at least 100 staff members.
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