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IBM Reassures Workers After Milestone China Deal

By Griff Witte
Washington Post Staff Writer
Thursday, December 9, 2004; Page E01

RESEARCH TRIANGLE PARK, N.C., Dec. 8 -- During an IBM employee meeting here Wednesday, a worker got up and asked a question that perhaps only 10 years ago would have been unthinkable: If he wanted to keep his job helping to design some of the world's most advanced computers, would he have to move to China?

On the other side of the globe, at a Lenovo employee meeting in Beijing, a worker got up and asked a similar question that a decade ago also would have been unthinkable, but for different reasons: If he wanted to keep his job, would he have to move from communist China to America?

Lenovo Chairman Liu Chuanzhi and John Joyce, senior vice president and group executive of IBM Global Services, at a Beijing news briefing. (Lenovo Via AP)

_____In Today's Post_____
IBM Stops Offering Cash-Balance Pension (The Washington Post, Dec 9, 2004)
IBM Sells PC Business to Chinese Firm in $1.75 Billion Deal (The Washington Post, Dec 8, 2004)
IBM Deal Puts Lenovo on Global Stage (The Washington Post, Dec 8, 2004)
_____Special Report_____
Globalization and Its Critics
In-depth Reports by Region
World News and Updates
_____Tech Jobs Headlines_____
AOL Cuts 750 Jobs; Most Are in Virginia (The Washington Post, Dec 8, 2004)
This Holiday, Shopping for Gifts and Jobs (The Washington Post, Nov 28, 2004)
Biding Time Doing the Bare Minimum (The Washington Post, Nov 28, 2004)
TechNews.com: Jobs

In both cases, the answers given by leaders of the two companies -- which on Tuesday announced they would team up to create the world's third-largest computer maker -- were the same: Probably not.

"There's certainly not going to be any wholesale movement of Beijing employees to the U.S., or U.S. employees to Beijing," said IBM spokesman Ray Gorman, who related the story of the meetings. "But I'd imagine there's going to be some movement."

And if the venture is going to succeed, those workers on opposite sides of the globe will have to get to know each other well, if only through e-mail, teleconferencing and the occasional transoceanic flight.

Under the terms of the $1.75 billion deal, International Business Machines Corp. will sell its once vaunted personal computer business to Lenovo Group Ltd., the leading computer maker in China. IBM will retain an 18.9 percent share of Lenovo when the deal is finalized, which is expected in the second quarter of 2005.

Headquarters for Lenovo's PC business will be in New York, but its principal operations will be in Beijing and here in North Carolina, where 1,900 of the 10,000 IBM employees expected to switch to Lenovo now work.

Issues of globalization are nothing new for this PhD-saturated, pine-tree scented, high-tech office park wedged between Durham, Raleigh and Chapel Hill in the North Carolina piedmont. Already more than half the approximately 40,000 employees here work for multinational firms. But Tuesday's deal represents something different: a major presence for a Chinese firm in a location synonymous with American innovation, all under a U.S. brand that for decades has stood at the frontier of global technological know-how.

The American and Chinese economies have worked themselves into a tight symbiosis in recent years, with U.S. consumer spending underwriting Chinese development, and Chinese banks and investors underwriting U.S. trade and government deficits. Companies like Wal-Mart Stores Inc. have built their massive scale largely on the basis of low-price supply contracts from Chinese manufacturers.

Unlike many other partnerships between American and Chinese firms, the Chinese company will ultimately call the shots in the IBM-Lenovo deal. And instead of a strict division of labor in which U.S. scientists and engineers do the innovating while Chinese laborers build the product, the burden of innovating the next generation of computers will be shared across continents. Lenovo will own the ThinkPad line of laptops and ThinkCentre line of desktops and will have the right to use the IBM brand for at least five years.

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