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IBM said on Thursday it would move its global procurement headquarters from New York to China in an endorsement of the country’s ever-growing role as a supplier to the global economy.

The company said John Paterson, its chief procurement officer, had relocated to Shenzhen, the Chinese special economic zone that borders Hong Kong.

It is the first time the company has moved the headquarters office of a global unit outside the US.

The company said the move would not affect staffing levels in the US, where it employs about 2,500 people in its procurement operations.

IBM has operated a China procurement centre in Shenzhen for more than 10 years, and also established a PC manufacturing joint venture there in the early 1990s.

The company sold its PC business to Chinese rival Lenovo two years ago and has also hived off its hard-drive business to Hitachi, but it still maintains a large sourcing operation in Asia.

IBM says it spends about 30 per cent of its $40bn annual procurement budget in Asia, and also employs more than 1,850 procurement and logistics staff in the region.

Shenzhen has successfully attracted investment from a large number of multi-national IT companies, as it seeks to upgrade its industrial base.

The government has actively encouraged low-tech industries to move out of the zone, to cheaper locations inland.

Shenzhen raised its mandatory minimum wage rates by up to a quarter earlier this year in a bid to accelerate the flight of labour-intensive businesses.

While rising labour and other costs in Shenzhen are also a concern for high-tech investors such as IBM, these are mitigated by a dense network of component suppliers that have taken root in the Pearl River Delta, as well as the region’s first-rate infrastructure.

Copyright The Financial Times Limited 2017. All rights reserved.
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