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7/16/2012
05:53 PM
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RIM Keeps Manufacturing Out of China

The cost arguments for shifting manufacturing to China must have been overwhelming, but Research In Motion CEO Thorsten Heins decided that RIM's reputation for security wasn't compatible with trusting its designs to Chinese state-run companies.

While economically hard to turn down, this is probably the one decision that RIM got right.

I recently saw an article on the Huffington Post that explained RIM's decision to not move its manufacturing operations to China. Dave Aitel, CEO of Immunity, Inc., talks about why China is risky business.

This is huge step in the right direction for RIM, and it might be the first thing it's done right this year. Chinese businesses are either state owned or funded and it's easy for government officials to direct the theft of intellectual property from companies doing business there.

This decision protects RIM's reputation, RIM's current product line, and most importantly, RIM's customers from rogue Chinese government-sponsored hackers running amuck through most of the email on the entire planet. It protects RIM's security features, and, though harder on its bottom line in the short term, RIM's value.

Despite the fact that RIM could have saved a boatload of cash, Heins saved the company by saying no to China. Chinese manufacturing has many positive draws, the most obvious one being cost, but RIM was smart. Though using China might have seemed like a good way to save its butt, it could have bought the farm.

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