Yahoo! Inc. (NASDAQ:YHOO) has confirmed that its operations in China will soon reach an end, which could eliminate around 300 jobs. A company spokesperson said that the employees at the Beijing office were informed by the company on Wednesday of the closure plans.
“We are constantly making changes to realign resources and to foster better collaboration and innovation across our business,” Yahoo said in a statement. “We will be consolidating certain functions into fewer offices, including to our headquarters in Sunnyvale, Calif.”
Yahoo cutting on expenses
Bloomberg was informed by a source familiar with the matter that about 200 to 300 people were employed at the Beijing office, and hence, they all would be severely affected. Yahoo! Inc. (NASDAQ:YHOO) employed about 12,500 people worldwide, and the employees at the Beijing office accounted for not more than 2% of the total company’s workforce, according to the data collected at the end of 2014.
The company’s expenses were sky rocketing because of which the investors were increasingly creating a pressure for reducing the expenses. Yahoo CEO Marissa Mayer was strongly suggested by Starboard, an activist investor, to cut down the company’s expenses by $500 million at least. There have been around 600 job cuts in the last six months by the company majorly from the operations in India and Canada,
China a tough market
According to the new ruling by the Chinese government last month, all the tech companies will be required to hand over source code, submit to audits and build deliberate back doors into both hardware and software products. Trade and open market are believed to be threatened by these new rules, according to Obama’s administration, who strongly criticized the new guidelines. This month itself the new rules will become effective.
The Beijing office was the only office of the company in mainland China, and was used as a research and development center. Yahoo offered no local products.
Yahoo! Inc. (NASDAQ:YHOO)’s experience in China has been a rocky one. In 2007, Yahoo was accused of providing information to the Chinese government. Following the lawsuit, the internet company was severely criticized by the lawmakers and the human right activists while Yahoo pleaded innocence saying that it simply complied with the Chinese law.