Why is IBM Helping Chinese Communists Bypass U.S. Products?
IBM has generated considerable buzz in business, trade and political circles by agreeing to share some of its most important computer technology with China, which stands to benefit long-term from the deal.
But the arrangement could result in the Chinese spending less on American technology in the future, raising questions of how beneficial IBM’s sharing will be for the U.S.
The deal itself involves IBM selling the designs of its high-end computer servers and software to “a little-known Chinese company” known as Teamsun, according to The New York Times. IBM’s move will help “Teamsun, and in turn China, develop a full supply chain of computers and software atop IBM’s technology,” the Times’ Paul Mozur reported. From there it could “create a domestic tech industry that in the long run will no longer need to buy American products, thus avoiding security concerns.”
IBM officials say there’s nothing to worry about with their decision.
It shouldn’t come as surprise that one of the leading U.S. technology companies would agree to such a deal since the Chinese have poured more than $1.75 billion into IBM through investments since 2005, according to the BBC.
“Critics say IBM is caving in to Chinese demands, placing short-term business gains ahead of longer-term political and trade issues,” wrote Mozur. ”Its actions may spur other American companies to break ranks and also submit to the new Chinese regulations, out of concern that IBM will get advantages by cooperating with the country.”
Observers say IBM has decided to give in to pressure from China to share their technology in spite of demands from the Obama administration that they don’t.
It’s also important to note that the deal comes with the blessing of Obama’s Department of Commerce, which had to approve the exporting of IBM’s technology.
To Learn More:
IBM Venture with China Stirs Concerns (by Paul Mozur, New York Times)
IBM To Share Technology with China in Strategy Shift: CEO (by Matthew Miller and Gerry Shih, Reuters)
What in the World Does China Own? (by Richard Anderson, BBC News)
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