IBM Takes Aim at Chinese Small, Midsize Business MarketIBM Takes Aim at Chinese Small, Midsize Business Market

Despite investing billions of dollars to build supply chains that span the globe, many multinational corporations remain stymied when it comes to creating last-mile E-commerce connections with relatively small Chinese businesses. More and more of global giants such as Wal-Mart Stores Inc. and Boeing count on these Chinese businesses as low-cost sources of everything from blue jeans to precisely machined industrial parts.

IBM believes the way to solve that problem is at the local level. In a strategy unveiled Thursday, the company will work with small and midsize businesses across China to help them build the infrastructures they need to better connect with their much bigger trading partners. "One of the biggest challenges for Chinese SMBs [small and midsize businesses] is improving connectivity," says Dave Carlquist, VP for global emerging marketplaces for IBM.

As part of the plan, IBM will open an SMB Innovation Center near Beijing University staffed by IBM researchers who will work directly with Chinese application developers and business owners. The hope is to create software that Chinese businesses can use to more easily tap into the global supply chain. The lab will be part of an existing IBM research facility. IBM would not say how much it is spending on the effort.

One Chinese software company that IBM researchers are working with is Efuture, a software vendor that focuses on the retail industry. IBM says it wants to help Efuture make its supply-chain-collaboration software more compatible with the major business applications typically used by multinationals. The average Chinese small and midsize business must deal with 485 trading partners per month, according to IBM. Last year, SAP introduced its own software, Business One, for small and midsize Chinese businesses.

IBM hopes that adapting software like Efuture's to take better advantage of the collaborative tools built into its middleware products, such as WebSphere, will boost its software sales in China. The country is an important emerging market for the company. In its most recent third quarter, IBM's combined sales to China, Russia, and Brazil rose 30%, compared with 8% in the Americas.