IBM offers cloud-based services to Chinese firms to address security concerns

International Business Machines Corp said on Thursday it would provide cloud-based risk analysis for a Chinese financial data firm in a deal that executives heralded as a model for future business in China, where state-owned enterprises are increasingly shunning foreign technology on security grounds.

Under the new software deployment model, financial data provider Shanghai Wind Information will send publicly available data to IBM's cloud for risk analysis without having to disclose specific portfolio holdings or having to install IBM software or hardware on its servers.

"This is an innovative deployment model in that IBM never receives client information," Andrew Aziz, IBM's director of risk analytics, said in an interview.

Aziz added that the new business model "continues to comply with the local laws, including data privacy laws in China and in all countries in which it operates."

(Also See: BlackBerry, Dell Downplay Threat From Apple-IBM Alliance)

The new deployment model underscores the challenges facing U.S. technology companies in China following Edward Snowden's revelations of extensive U.S. government spying and security vulnerabilities in American-made hardware.

Citing national security concerns, the Chinese government has encouraged its state enterprises to wean themselves off foreign hardware suppliers and reportedly ordered state banks to pull out their IBM gear earlier this year.

IBM has been particularly targeted due to the sensitive and critical role its servers play in practically every major industry from banking to energy.

IBM executives on Thursday declined to discuss the company's business in China more broadly but said they believed the new cloud-based deployment model would help it succeed in the market.

(Also See: IBM's Watson Advises US Soldiers on Life After Service)

The company disclosed in April that sales in China fell 20 percent in the first quarter, and executives have repeatedly sought to reassure investors that the IBM's future in the country remained positive with a series of partnership agreements with Chinese agencies.

IBM said in July it would donate $100 million in big data software and provide technical training at 100 Chinese universities as part of an major agreement with China's Ministry of Education.

The same month IBM unveiled a project with the Beijing government to predict and control air quality using the company's big data processing technology.

© Thomson Reuters 2014