Yahoo closes R&D site in China

Yahoo announces it will close its research and development (R&D) centre in China in plans to consolidate research and cut costs

Yahoo has announced it will close its research and development (R&D) centre in China in plans to consolidate research efforts and cut costs.

"We are constantly making changes to align resources, and to foster better collaboration and innovation across our business," Yahoo said.

“We will be consolidating certain functions into fewer offices, including to our headquarters in Sunnyvale, California, US.” 

The research lab in Beijing is Yahoo’s only remaining site in China after local e-commerce firm Alibaba took over Yahoo’s operations in the country in 2005.

The centre’s 350 employees – mainly comprising engineers and scientists – have been told that lay-offs will begin at the end of March 2015, reports the South China Morning Post.

Yahoo cuts operating costs

The centre is one of Yahoo’s three global R&D centres. It opened in 2009 to find ways to expand Yahoo globally and to study search, advertising, cloud computing and other personalised tools.

News of the closure has prompted at least one local recruitment agency to stage a guerilla-style campaign to find employment for those made redundant, according to the BBC.

The news has also sparked speculation that the move is related to government pressure or censorship – but most analysts say the move is probably aimed at reducing operating costs.

Some analysts said Yahoo’s withdrawal from China is in line with the trend of US firms retreating to countries such as Vietnam and Cambodia, as economic growth pushes wages up in China.

Last month, Microsoft confirmed plans to shut down two former Nokia device manufacturing plants in China, and to send some of the plant equipment to its manufacturing facility in Vietnam.

Yahoo struggles to grow profits

Closure of Yahoo’s research centre is perhaps not surprising in the light of the fact that Yahoo offer no services to Chinese users, after it withdrew email services in China in 2013.

Earlier this year, Yahoo announced plans to spin off its remaining 15% stake in Alibaba, having begun a phased sell-off of its original 40% stake in 2012.

The cost-cutting consolidation plan is part of efforts by Yahoo chief executive Marissa Mayer to turn around the company’s fortunes.

Yahoo has been struggling to grow profits in the face of competition from rivals such as Google.

In an attempt to adapt to the move of users to mobile devices, Mayer has overseen a string of acquisitions aimed at boosting mobile advertising revenues and creating sources of income.

Since Mayer took over as chief executive in 2012, Yahoo’s acquisitions have included BrightRoll, SummlyQwikiFlurry,  Xobni and Snapchat rival Blink.

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