IBM CEO "Withdrawal from China R&D Already Completed... Cannot Be Reversed"

Withdrawal of China from 'Strategic Stronghold'

Arvind Krishna, CEO of IBM, who recently decided to close the company's research and development (R&D) operations in China, stated that the decision cannot be reversed.

According to Chinese economic media Caixin on the 12th, CEO Krishna said during an internal online meeting with IBM employees worldwide on the 10th, "The decision to close the China R&D division has already been finalized and cannot be withdrawn," adding, "We hope to focus, and we need strategic hubs."

[Image source=Reuters Yonhap News]

According to CEO Krishna, strategic hubs must be regions where IBM can support various products and accommodate thousands of team members. These hubs should be capable of not only software development but also hardware design and consulting services. He identified Austin, Texas, and San Jose, California in the United States; Toronto in Canada; Krakow in Poland; Dublin in Ireland; and Bengaluru and Kochi in India as IBM's strategic hubs. China was not included.

CEO Krishna stated, "We are facing difficulties in pioneering new strategic hubs, but the rewards far outweigh the pain," and added, "I definitely feel that some employees resist this (closure of the China labs) decision, but frankly, this matter is already over, and given the current situation, the decision cannot be reversed at all."

IBM recently decided to close its remaining facilities in China, the China Development Laboratory (CDL) and China Systems Laboratory (CSL), resulting in the layoff of about 1,000 employees. According to Caixin, IBM informed employees of this fact through an online meeting on the 26th of last month. The meeting was originally scheduled to last 30 minutes but ended just 3 minutes after the layoff announcement. IBM is currently negotiating severance with the affected employees.

After the decision to withdraw from the China labs, some projects previously conducted in China are reported to have been relocated to India. Currently, IBM's official website is said to have posted numerous related job openings.

According to an IBM report, sales in China decreased by 19.6% last year, contrasting with a 1.6% increase in sales in the Asia-Pacific region. As US-China tensions have intensified recently, global big tech companies are scaling down their operations in China. Previously, Ericsson, Tesla, Amazon, and Intel also carried out layoffs in China.