IBM is reportedly closing down its research and development (R&D) departments in China, following the trend of other American tech giants reducing their presence in the Chinese market. Local media outlets have reported that this decision will impact over 1,000 employees across China.
According to staff members who spoke to Chinese media outlets, including Jiemian, an online news site owned by the Shanghai municipal government, IBM’s move will affect its workforce in China. In response to these reports, an IBM spokesperson stated that the company adjusts its operations based on needs but assured that these changes would not affect their ability to support customers in China.
IBM was one of the first major Western companies to invest in the Chinese market back in the 1980s. However, it has now joined a growing list of Western tech companies scaling back or completely withdrawing from China due to increasing regulatory pressures imposed by the Chinese Communist Party (CCP).
LinkedIn, owned by Microsoft, shut down its services in China last year citing a challenging operating environment and greater compliance requirements. The company had faced criticism for blocking profiles related to researchers and journalists working on topics involving China. LinkedIn later launched a job-search-only platform called InCareer for Chinese business professionals but ultimately phased it out due to fierce competition and a challenging macroeconomic climate.
Yahoo also announced its withdrawal from mainland China last year due to the increasingly challenging business and legal environment there. Airbnb decided to retreat from China earlier this year as repeated lockdowns and strict COVID-19 measures disrupted various industries.
In addition, Amazon pulled its Kindle service out of the Chinese market last year while Microsoft asked its employees based in China to consider relocating elsewhere.
These moves come amid flaring trade tensions between the United States and communist China. The Biden administration has increased tariffs on imported goods such as electric vehicles and solar panels as a response to unfair trade practices by Beijing that disadvantage American companies and workers.
U.S. lawmakers are urging action against Beijing’s unfair trade practices aimed at acquiring American technological know-how through tactics like intellectual property theft and forced technology transfer.
U.S Ambassador Nicholas Burns has warned that there is no level playing field for American companies operating in China due to intellectual property rights violations, forced technology transfer, massive subsidies provided by both central and provincial governments favoring domestic competitors over foreign rivals.