IBM, the American tech multination, is trimming its workforce in China. It is doing away with its research and development (R&D) activities in the country. That means, it is shutting down its China Development Lab and China Systems Lab. The move will affect at least a thousand employees across Beijing, Shanghai and Dalian.
The impacted employees reportedly found their access to the company’s intranet system denied over the weekend. On the morning of 26 August, the job cuts were announced in a meeting.
It is pertinent to mention here that IBM has always acknowledged the important contributions made by its China Development Lab to WatsonX, which is the company’s enterprise-facing generative AI development platform, launched in May 2023.
The Big Blue, however, maintains that the layoffs will not affect its services or clients in the Greater China region.
The sales of the company have been dropping in recent times. Last year, IBM posted a revenue that was 19.6 per cent less in China, whereas in the Asia-Pacific it had reported a 1.6 per cent rise in revenue. China sales in the six months ended 30 June 30 2024 fell by five per cent, while there was a 4.4 per cent increase in revenue in Asia-Pacific.
The Chinese market has come to be rather difficult for foreign businesses to operate in, given the geopolitical situation with the US. Recently, General Motors also started trimming its workforce in China. Sephora, the cosmetics retail firm also did away with three per cent of its China team.