Yahoo is said to cut 300 jobs as part of China office close

BEIJING — Yahoo is shutting down its office in China, a move that will eliminate 200 to 300 jobs, according to a person with knowledge of the matter.

The Web portal, which has been consolidating offices and trimming staff around the world, told employees based in Beijing that it will close the site, Yahoo said in a statement today (March 19). Yahoo had about 12,500 workers worldwide at the end of 2014. While the company didn’t say how many would be affected in China, it employed 200 to 300 people there, said the person, who asked not to be named because the number isn’t being disclosed publicly.

“We are constantly making changes to align resources, and to foster better collaboration and innovation across our business,” Yahoo said in the statement. “We currently do not offer local product experiences in Beijing but the office has served as a research and development centre.”

Yahoo is looking for new ways to trim expenses as it comes under pressure from investors, such as Starboard Value, who have called for cost-saving measures. Chief Executive Officer Marissa Mayer said in January the company has focused on efficiency by keeping its employee numbers little changed even as it invested in products and made acquisitions that added staff at the portal, whose revenue growth has stalled since 2008.

GLOBAL CUTS

“An R&D facility like this is a huge cost, and for a company as weak as Yahoo is now, it doesn’t make sense,” said Mr Shaun Rein, managing director of China Market Research in Shanghai. “Yahoo doesn’t have significance in China. Yahoo can’t really recruit top people and Chinese firms are not going to advertise on Yahoo.”

For Yahoo, based in Sunnyvale, California, the exit closes a chapter on a sometimes difficult history in China. Executives came under criticism from human-rights activists and US lawmakers after the company turned over information to the Chinese government on journalist Shi Tao, who was later sentenced to 10 years in prison.

Yahoo sold its Chinese operations to Alibaba Group in 2005.

Last month, Yahoo cut about 1 per cent of its workforce, or about 125 people, including editorial staff in Canada. The company also closed its office in Amman, Jordan, and eliminated about 400 positions at its site in Bangalore, India, in recent months.

ALIBABA SPINOFF

Yahoo shares have gained 13 per cent in the past year, buoyed in part by the company’s stake of about 15 per cent in Alibaba, China’s largest e-commerce company. In January, Ms Mayer unveiled plans for Yahoo to spin off its Alibaba holdings, which are valued at more than US$32 billion (S$44.3 billion).

So far, Yahoo is keeping its US$8 billion stake in Yahoo Japan Corporation.

The closing of the China office wasn’t related to any government concerns, said the person familiar with the plan. The move was reported earlier by the South China Morning Post.

Yahoo’s move is the latest in a series of retrenchments by US technology companies operating in China. Last month, game-maker Zynga said it will close its Beijing office, terminating 71 employees.

Microsoft Corporation said in December it was shutting phone factories in Beijing and Dongguan as part of a consolidation of its Asia manufacturing in Vietnam. BLOOMBERG