IBM and Wanda are Building a New Cloud Company in China

(Bloomberg) -- Big Blue is pushing to build up its cloud business in China by striking partnerships with local companies, starting with billionaire Wang Jianlin’s Wanda Internet Technology Group, IBM Chief Executive Officer Ginni Rometty said.

In China, “you see two models,” Rometty said. There are very large state-owned enterprises, and a budding entrepreneurial segment. “You really do need to look at those two markets differently and support them both,” she said in an interview with Bloomberg TV. “That’s what this cloud will do.”

IBM and Wanda are creating a new cloud company using IBM’s technology and Wanda’s brand. Wanda will use IBM’s cloud products as a customer and also help sell them to more Chinese companies, she said, noting the conglomerate’s ecosystem and reach from luxury hotels to cinemas. The Wanda partnership, Rometty said, is the first for IBM’s cloud business in the country. China is a “good part” of IBM’s revenue, she said. The Asia Pacific region accounted for 22 percent of IBM’s fiscal 2016 revenue.

International Business Machines Corp. posted $13.7 billion in cloud revenue in 2016. While revenue in a number of other products and segments has been declining for the last few years, Big Blue has invested more in new software, hardware and services that help companies move workloads and applications to computer servers located remotely. Rometty said she expects the cloud business to drive growth in the next couple of years.

Watch more: Gina Rometty’s ten-minute interview in full.