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IBM in China: Big Blue sees red, hopes to grow Middle Kingdom's tech

Scaling the Great Wall

IBM has stated explicitly what its recent strategy had already suggested implicitly: Big Blue has decided to get more strategic in China.

Having confirmed it's throwing its Power chip blueprints at system manufacturers in the Middle Kingdom, IBM's CEO Virginia Rometty has told Reuters IBM needs to go beyond treating China as a customer and a giant factory.

Instead, laying out her new strategy, Rometty said Big Blue will go to work helping build China's IT sector and will share technology with local firms.

Rometty was speaking to the government-sponsored China Development Forum in Beijing.

Reuters quotes Rometty as saying “If you're a country, as China is, of 1.3 billion people, you would want an IT industry as well,” adding that rather than “frightening” IBM considers it an opportunity.

The company's new policy would bring Chinese partners deeper into the IBM ecosystem – an example being the deal to let Suzhou PowerCore Technology build the local version of Power8 for locally-produced servers – and reach all the way to software partnerships.

Other Chinese companies taken into Big Blue's warm embrace include server builder Inspur and software vendor Youyou.

The first non-IBM variant of the Power8 chip is sampling, at least one Linux is fully ported to it, and fifteen different components and systems were on display at the inaugural OpenPower Summit in San Jose ...
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China strongly encourages firms operating in its borders to form local alliances and joint ventures, and much of this to date has involved setting up manufacturing operations which, while they've created giants like Foxconn, don't involve as much technology transfer as Beijing would like.

The Snowden revelations have added to Beijing's wariness by raising suspicions about the security of US products. The government has been accused of removing US products from the list of kit that it will buy, something that at Cisco refuted.

Reuters notes that the Snowden leaks apparently harmed IBM's business in China, with a drop in the third quarter of 2013 that has since stabilised. ®

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