IBM to Close Research Facilities in China, Resulting in Job Losses for more than 1,000 Employees
IBM is in the process of shutting down its research and development (R&D) departments in China, local media outlets report, joining a growing list of Western tech companies that have been pulling out or scaling back their presence in the Chinese market.
The decision by the tech service provider based in Armonk, New York, will impact over 1,000 employees across China, as reported by local staff to various Chinese media outlets, including Jiemian, a news site owned by the Shanghai municipal government.
An IBM spokesperson mentioned in a media statement that the company makes adjustments to its operations “based on needs.”
“These changes will not affect our ability to support customers in China,” the spokesperson added.
IBM was one of the first significant Western companies to invest in the Chinese market back in the 1980s, according to China’s state media.
In January 2021, IBM discreetly closed its China Research Laboratory, a Beijing-based R&D center focusing on quantum computing, big data analysis, and other advanced technologies.
China Pullout
IBM’s move aligns with a trend of Western tech companies that have been pulling out or scaling back their presence in the Chinese market, amid escalating regulatory pressures from the Chinese Communist Party (CCP).
LinkedIn shut down its services in China in 2021. Owned by Microsoft, the career networking company cited a “significantly more challenging operating environment and greater compliance requirements in China” as reasons for its decision.
Yahoo also announced its exit from mainland China in November 2021. The internet giant from Sunnyvale, California, attributed the move to “the increasingly challenging business and legal environment in China.”
In May 2022, Airbnb chose to withdraw from China, without providing specific reasons. The decision came amidst repeated lockdowns and strict zero-COVID measures that impacted China’s economy and various industries.
Amazon pulled its Kindle service out of the Chinese market in June 2022 as well.
Most recently, Microsoft urged its employees in China to consider relocating to other countries.
While the Chinese regime has been trying to attract foreign investors in recent years, its actions targeting foreign companies and businesspeople on national security grounds have created a chilling effect on the business community, especially for foreigners.
Foreign investors have raised concerns about various anti-espionage and data-controlling regulations in China.
In response to the CCP’s trade practices, the Biden administration has imposed higher tariffs on certain imports affecting U.S. industries.
U.S. Ambassador to China Nicholas Burns highlighted the challenges American companies face in China, mentioning issues like intellectual property rights violations and forced technology transfer.
