IBM’s Venture Deal with China Sparks Concern

IBM has announced a new venture in China to assist Beijing company Teamsun in the development of a full supply chain of computers and software using IBM’s technology. The goal of the new venture is to create a domestic tech industry in China that will eliminate the need to buy American products, thus avoiding security concerns. The chief scientist overseeing the IBM project on behalf of the Chinese government is former military engineer Shen Changxiang.

IBM has received permission under United States export laws to provide a partial blueprint of its higher-end servers and the software to Teamsun. A recent statement posted on Teamsun’s website said the new capabilities would help the company better address the security concerns of local Chinese companies and eliminate the capability gap between Chinese and American companies.

The Obama administration has been trying to persuade Beijing to drop the new measures recently implemented that require American companies to hand over technology in exchange for access to the Chinese market. Critics say IBM is placing short-term business gains ahead of longer-term political and trade issues by caving in to Chinese demands. Other American companies may follow IBM’s lead and submit to the new Chinese regulations out of concern that IBM will attain an advantage by cooperating with the country.

As a member of a global program called Open Power, which IBM began in 2013, IBM has agreed to be open with its licensing technologies. The goal of the program is to provide base technology that can be used and enhanced by members worldwide, spurring global partnerships and business opportunities. Open Power currently has 120 members worldwide, including Google and Samsung Electronics.