deal shows U.S. tech giant IBM still engaged in China
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[August 26, 2014]
By Gerry Shih
BEIJING (Reuters) -
Industrial and Commercial Bank of China (ICBC) has
deployed a new IBM mainframe computer system, the two
companies said on Tuesday, boosting the U.S. technology
giant's credentials in the country.
IBM's joint announcement with ICBC, the world's largest bank by
market capitalization, shows IBM is still doing business with
China's state-owned banks despite widely circulated media reports in
May that suggested China's central government had ordered banks to
remove IBM equipment because of cyber security concerns.
The U.S. company's efforts to repair any public relations damage
have included the announcement in recent weeks of a string of deals
in China to assure investors of its future in the market and salvage
its reputation with other potential Chinese buyers.
In a statement released only in Chinese, ICBC chief technology
officer Lin Xiaoxuan said that ICBC was the first bank in mainland
China to introduce IBM mainframes 30 years ago and that they have
since played an "important role" in the bank's IT operations".
"IBM mainframes have consistently helped us keep our IT systems
steady and safe and will continue to do so in the future," Lin said.
ICBC's newly deployed mainframe, which was purchased from IBM
several months ago, allows sensitive financial data to be routed
around the world in the event of a crash at one of its 40 global
BAN REPORTS 'OVERBLOWN'
Beijing-based Forrester analyst Gene Cao said that the Chinese
government would like to reduce its banks' dependence on foreign
technology but added that his conversations with IT officials at
large banks lead him to believe that the reports about an IBM ban
These officials have expressed concern that the outcry to push out
IOE - the moniker in China for Western tech giants IBM, Oracle and
EMC - could hamper their business, Cao said.
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"Perpetuating rumors that there’s a ban on IOE would pose a risk for
the banks, too, and I don't think they necessarily want that," Cao
IBM Greater China Chief D.C. Chien told the state-run China Daily
newspaper in a recent interview that local banks have continued to
purchase its products.
IBM additionally announced this week that it would team up with
China Telecom <0728.HK> to provide cloud computing services to small
and medium-sized businesses.
Before the most recent public relations push, IBM said in April that
sales in China had fallen by 20 percent, echoing disappointing
results from many U.S. technology companies that suffered plummeting
sales in China after revelations by Edward Snowden of extensive U.S.
In an unexpected development, Inspur, a Chinese rival to IBM that
marketed itself as a more secure option for Chinese banks, announced
this week that it will sell its high-end K1 server system with IBM's
database and web application software installed.
(Editing by Matt Driskill and David Goodman)
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