International Business Machines Corporation CEO Virginia Rometty, speaking at the China Development Forum in late March, announced a reverse in the company’s China policy. IBM will now share its technology with Chinese firms and allow them to design software and hardware based on its products, with the goal of building up China’s IT sector. “If you’re a country, as China is, of 1.3 billion people—you would want an IT industry as well,” she stated at the Forum.
Rometty believes that foreign companies that view China as just a manufacturing hub or a sales destination are missing this opportunity, and she plans for IBM to lead by example. As Reuters notes, the CEO’s remarks are “among the clearest acknowledgements to date by a high-ranking foreign technology executive that companies must adopt a different tack if they are to continue in China amid growing political pressure.”
IBM’s announcement comes at an interesting time in China’s foreign tech firm environment. IBM’s sales dropped sharply in China after Edward Snowden revealed the extent of US digital spying in foreign countries, and it has been one of the foreign tech companies hardest hit by China’s new technology policies. Despite these set-backs, Rometty has voiced confidence that with cooperation at the heart of IBM’s new China policy, it will be able to boost sales in the region. In fact, the company’s sales in China as well as its stock value have already begun to increase in light of its recent announcement.
Another roadblock for IBM is Beijing’s push for the development of domestic technology. Specifically, China had been working to draft an anti-terrorism law that would crack down on foreign companies, mandating that the Chinese government be given work-arounds for whatever security measures are used in their products.
While IBM is prepared to accept the measures as a necessary part of doing business with China, many other foreign companies are against them, since their operations in other countries could be threatened by giving China back-door access to their products. The United States, which views the law as discriminatory to foreign companies, is lobbying against it.