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.
