IBM to build e-commerce research labs for Chinese retailer

IBM is building two research centers for Suning Appliance

IBM has reached a deal with Chinese electronics retailer Suning Appliance to build research centers in China and the U.S. meant to develop e-commerce products for the company.

IBM, already a provider of internal management systems for Suning since 2005, will now help the Chinese company expand its e-commerce site and services, said IBM spokeswoman Harriet Ip.

As part of the plan, IBM will build a research center in the Chinese city of Nanjing that will be staffed with 15,000 Suning employees over the next three to five years. Some of the products the center will develop include applications to allow household appliances to connect with the Internet and mobile handsets.

IBM is also establishing a joint development lab with Suning in Silicon Valley. The planning for the lab is still in the preliminary stages, but it will also focus on developing e-commerce services, Ip said.

Suning made the deal as the company is aiming at a greater presence in China's burgeoning e-commerce sector. While Suning has 1,700 physical stores, the company has to compete with the likes of China's Alibaba Group, which operates two of the top online retail sites in the country.

Suning has launched its own business-to-consumer (B2C) site, which now has a 2.4 percent market share, according to Beijing-based research firm Analysys International. In contrast, Alibaba's Taobao Mall has a 35.5 percent share.

"There is no question that we live in a time of rapid change that calls for the transformation of organizations in many industries," said Frank Kern, an IBM senior vice president in a speech last Friday.

Suning's goal is to build an e-commerce platform that will better personalize the shopping experience, by recommending appropriate products and providing better search. Financial terms of the detail were not disclosed.

Suning could not be immediately reached for comment. The company's president Zhang Jindong said in a statement that his company was moving to a business model that could leverage both e-commerce and physical retail shopping.

"With this innovative business model, consumers, suppliers and businesses along with society can all benefit," he said.

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