IBM Is Latest US Tech Giant To Pull Back From China

IBM is the latest American company to downsize its presence in China amid heightened tensions between Washington and Beijing. From a report:

China’s efforts to reduce its dependence on the West have ratcheted up local market competition — and US tech giants including Microsoft are looking elsewhere to house their operations. IBM will shut down its research and development department in China, impacting about 1,000 jobs, multiple outlets reported Monday.

The Chinese government has encouraged domestic companies to overtake and push out US tech dominance out of the country in a bid for self-sufficiency in the sector, the Wall Street Journal reported earlier this year. IBM has faced mounting competition in China in recent years, IBM executive Jack Hergenrother told employees virtually Monday, per the Journal. IBM reportedly plans to move its R&D operations to other overseas facilities. According to the company’s 2023 annual report released earlier this year, the company saw its revenue in China drop 19.6% last year.

China is unsafe for business

Anything developed, designed or built in China is invariably stolen.

Quantity over Quality

China graduates almost 10x the number of engineers that the US produces each year. Some of them are good, but by and large most of them can do little more than get grades in school. Their best engineers seem to come from US schools. Their tech base still heavily relies on stealing stuff from more advanced nations.

I can’t blame them for not wanting to be under the thumb of foreign corporations, but chasing them out of the country isn’t going to work.

Re:China is unsafe for business

China isn’t even safe for Chinese businesses.

Many have moved their executive offices and R&D elsewhere, often to Singapore.

Tech companies in China are now required to have CCP members on the board to monitor their decisions for political deviance.

Jack Ma and others have been detained and intimidated. Jack is now living in Japan.

Tech innovation isn’t compatible with correct Xi-Thought.

Re:Quantity over Quality

Outsourcing makes a lot of sense in most cases. Making money is the direct objective of a business venture. Making good quality products and making customers happy is only one means to that end.

Ask Boeing how that’s working out for them.

Here’s how my former employer handled China

So I used to work for a US based Fortune 500 company. My severity agreement may still be in effect, so I am not going to name them to be safe. But I can tell you this about them. They are in the bottom half of the Fortune 500. Although they are an international company, the vast majority of their business comes from the USA and Canada.

So this company, who I will call Acme-X, used to make us all do mandatory internal training every year. You had a list of online training you had to complete and a deadline to finish them in with the threat of termination hanging over your head if you missed the deadline. Every year we got bribery training. They really drilled it into us that not only could you as an Acme-X employee never, ever bribe someone to get business, you couldn’t even give jobs to friends of foreign government officials to get business. So about 13 years ago, I had a girlfriend who was from China and she said to me “Did you know your company has an office in Shanghai?” I had no idea about that. So I looked it up on an internal website and sure enough, we did. It seems that maybe in the late 2000s, Acme-X bought out some Chinese company based in Shanghai to get a foothold in the Chinese market. It never really worked out. The impression I got was that doing business in China was so dishonest that there was no real way Acme-X could grow the business they bought or get new business going through them without paying bribes, and the training we employees got encouraged us to rat out people who were paying bribes, so they simply firewalled this Shanghai based business from the entire rest of the company. The Shanghai employees got no access to US based systems. We didn’t use their employees for anything. And when we had company wide meetings via Zoom like technology, they never participated and weren’t even invited to attend. My former employer still owns this office in Shanghai, but I have no idea why. I guess they can’t give up the hope that maybe one day things will change in China and they can do legit business there.