IBM and China

Bob Cringely writes that IBM’s deal with Lenovo is not about the US, but about China:

Doing business in China always requires having a partner. You don’t just set up an IBM China and start selling stuff. You find a local partner company and move into the market together. Now IBM’s partner will be Lenovo, the biggest, baddest PC maker in China, which is a good partner to have. IBM not only has its Chinese partner, it has a substantial equity position in that partner as a result of this transaction. That’s unique as far as I know. Chinese-U.S. corporate partnerships aren’t always the easiest marriages, but in this one, IBM actually has a vote. It also got Lenovo to move its global headquarters to the U.S. and accept an American CEO and 10,000 U.S. employees, which will have to change the way Lenovo runs its global business.

In any other U.S.-China corporate partnership, a top-level meeting requires a 20-hour plane ride, but the top guys at IBM and Lenovo can meet for lunch at Denny’s. All this is nothing but good for IBM. Look for this partnership to expand inside China to cover much more than just personal computers as IBM tries to become the number one or two player in every segment of Chinese IT.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.