IBM China to Close R&D Department with 1,000 Employees

IBM's China subsidiary is closing its local research and development (R&D) department with more than 1,000 employees, according to China’s First Financial Daily on the 26th.

IBM China stated in a press release to the newspaper, "We will adjust operations as necessary to provide the best service to our customers," adding, "This will not affect our capabilities to support customers in the Greater China region."

[Image source=Reuters Yonhap News]

It also added, "Chinese companies, especially private enterprises, are increasingly focusing on capturing opportunities brought by hybrid cloud and artificial intelligence technologies," and "The focus of IBM’s local strategy in China is to build teams leveraging experience in technology and consulting." IBM further explained that it will provide services to private Chinese companies and some multinational corporations in China going forward.

The First Financial Daily emphasized, "In the past, large state-owned enterprises in key sectors such as finance and energy were IBM’s most important customers," and "This R&D department closure marks a significant turning point in IBM’s 40-year development history in China." IBM officially entered China in 1984 and once grew so rapidly that Huawei’s founder Ren Zhengfei described IBM as "Huawei’s mentor."

IBM China has recently accelerated its workforce restructuring. In January last year, it cut 3,900 employees, and by the end of the same year, it halted related hiring, stating that about 8,000 jobs would be replaced by artificial intelligence (AI). According to a report from March, some departments faced reductions of up to 80%.