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IBM, Lehman Are IT Shopping in China

IBM and financial house Lehman Brothers have created a $180 million China Investment Fund with the goal of providing business insight for the country's public and private companies.

The investment plan, begun with $90 million in initial funding from each of the two companies, held out a goal of transforming the finances and business practices of China's enterprises. Unlike the usual venture capital blueprint, the China Investment Fund will focus on mid-stage or mature public and private companies.

The new fund is in addition to the already-existing IBM Venture Fund, IBM spokesperson Fred McNeese told internetnews.com.

IBM and Lehman will "provide management and technology expertise" to the companies in which they invest, according to a statement. The fund also supports China's governmental policy of encouraging companies to update their business practices and management.

"IBM has been working as an innovation partner to Chinese companies and the Chinese government for a long time," Henry Chow, IBM Greater China chairman and CEO, said in a statement. IBM has partnered with more than 250 Chinese startups, providing technology expertise, market routes and joint client engagements, according to IBM.

While ranked fourth in the world in 2005, China's economy is expected to place third behind the U.S. and Japan by 2010. China's current five-year blueprint puts company-driven innovation at a premium over government-led programs, focusing on upgrading traditional industries such as IT, communications and biotech.

IBM and Lehman explained the decision provided stable companies management and technology expertise, enabling them to keep pace with a fast-evolving Chinese market.

No stranger to the China market. After first arriving in 1934 then returning again in 1979, IBM China now employs 7,600 employees dedicated to sales, services, manufacturing and research activities. IBM's China Research lab, established in 1995, broke ground by being one of the first multinational research efforts to be based in China. The research facility is now one of IBM's eight worldwide research labs.

In 2005, China's Lenovo purchased IBM's PC business for $1.25 billion. Chipmaking giant Intel last year established a similar investment fund aimed at capturing a share of the burgeoning Chinese technology market. The $200 million Intel Capital China Technology Fund targeted Chinese companies which could help the chipmaker's goal of expanding that country's Internet infrastructure.