Although the Chinese government turning up the heat on foreign IT vendors, IBM is teaming up with its competitor in the country, local server vendor Inspur. The two companies on Friday announced that Inspur would offer IBM'S DB2 and WebSphere Application Server software on Inspur's high-end TS K1 systems.

The companies will also collaborate to develop new hardware systems for Inspur using IBM's Power server chips. Earlier this year, Inspur became a member of IBM's OpenPower Foundation, an alliance of vendors dedicated to developing the Power chip architecture.

Both companies will still compete in the server arena, but are working together because clients and partners demanded more technologies to analyze larger data sets, IBM said.

IBM has been facing competition from Chinese rivals and of course, Dell, Lenovo and Huawei Technologies.

In addition, the Chinese government are ttrying to rely more on local vendors for IT products. In May, the country said it would block companies from selling to China if their IT products failed to pass a "cybersecurity vetting system."

IBM is also partnering with China Telecom to help small and medium businesses (SMBs) implement and scalable SAP cloud-based applications.

As part of an agreement signed between the two companies, the leading Chinese telecommunication company and the largest infrastructure network operator in China will manage clients' infrastructure that includes cloud platform resources, networking and mobile devices. IBM will integrate the software, hardware and end-to-end service capabilities to create a complete environment that supports SAP applications on the cloud.

Working with China Telecom, IBM will provide integrated management across all SAP architectures and delivery models.

Under the agreement, China Telecom and IBM will first focus on clients in the Guangdong province and then extend the project to such key areas as Yangtze River Delta, Pearl River Delta, Beijing and Tianjin.