IBM, the American multinational tech company, is reducing its workforce in China by shutting down its research and development (R&D) activities. The company is closing its China Development Lab and China Systems Lab, leading to job cuts affecting at least a thousand employees in Beijing, Shanghai, and Dalian.
Affected employees reportedly had their access to the company’s intranet system denied over the weekend. The job cuts were announced in a meeting on the morning of 26th August.
It’s important to note that IBM has acknowledged the contributions of its China Development Lab to WatsonX, the company’s generative AI development platform launched in May 2023. Despite this, the company stated that the layoffs would not impact its services or clients in the Greater China region.
IBM’s sales have been declining, with a 19.6% drop in revenue in China last year, while reporting a 1.6% rise in revenue in the Asia-Pacific region. Sales in China for the six months ending 30th June 2024 fell by 5%, while there was a 4.4% increase in revenue in the Asia-Pacific.
Operating in the Chinese market has become challenging for foreign businesses due to the ongoing geopolitical situation with the US. Notably, General Motors has also begun reducing its workforce in China, and Sephora, the cosmetics retail firm, has laid off three percent of its China team.
