IBM’s Venture with China Stairs Concerns

Shen Changxiang, former supervisor, cyber security of China’s strategic missile arsenal and spearhead computer security research for the navy has warned of the perils his country’s reliance on American technology.

A former military engineer, and one of China’s top-ranking cyber officials, Shen started working with IBM; a company synonymous with American technological prowess and his main task is to help a little-known Chinese company absorb and build upon key technologies licensed by IBM.

In the last 16 months, IBM has agreed and received permission under United States export laws – to provide the Beijing Company, Teamsun, with a partial blueprint of it higher-end servers and the software that runs on them, according to IBM announcements and filings from Teamsun. As the chief scientist overseeing the IBM project on behalf of the Chinese government, Mr.Shen is helping Teamsun, and in turn China, develop a full supply chain of computers and software atop IBM’s technology.

The goal is to create a domestic tech industry that in the long run will no longer need to buy American products, thus avoiding security concerns.

What IBM is doing in China is no different from what the company is doing elsewhere. Yet IBM’s activities in China have become sensitive. They are running into efforts by the Obama administration to persuade Beijing to drop new measures that require American companies to hand over technology in exchange for market access.

Critics say IBM is caving in to Chinese demands, placing short-term business gains ahead of longer-term political and trade issues. 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.