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IBM expands China research site in midmarket push

Big Blue adds "innovaton center" to its China Research Lab to develop technology catering to small and midsize businesses.

IBM on Thursday opened an expanded research center in China to bulk up its technology portfolio for midsize businesses worldwide.

The SMB Innovation Center was added to the company's research lab in Beijing, which already employs "hundreds" of the 3,000 IBM researchers worldwide. The company did not say how many additional researchers are staffing the new center. The company declined to put a dollar amount on its new investment but said it will double the physical space devoted to the lab. The project includes investment in a related computing infrastructure and a software developer outreach program.

IBM plans to pair its researchers with local independent software vendors (ISVs) to seek out problems specific to midsize businesses. The company plans to use the results from the research-oriented collaborations in other research centers and products worldwide, executives said.

"We're stepping out of the ivory tower. We're taking pure research and existing information technology, and making it available to the ISV community," said Dave Carlquist, vice president of global emerging markets at IBM. "Through this partnership, we'll be able to identify marketplace requirements and client customer needs."

Researchers at the Chinese facility have already worked on one pilot project involving the retail industry. IBM collaborated with a local company to devise a supply chain system based on IBM's middleware software and hardware.

The technology underpinnings of that application, which help Chinese manufacturers overcome connectivity problems, can be used in other engagements, IBM said.

IBM has singled out medium-size businesses as a market critical to the company's growth in the coming years. It claims that information technology spending from small and midsize companies totals about $300 billion worldwide.

Locating the center in China is meant to capitalize on the rapid growth IBM is seeing in emerging markets. In the third quarter of this year, the company's combined revenue from Brazil, Russia, China and India climbed 30 percent.

China, in particular, has a high number of smaller companies: about 99 percent of all businesses are small or medium-size businesses, according to Carlquist.