Yahoo to close Beijing research centre as company seeks to downsize

PUBLISHED : Wednesday, 18 March, 2015, 5:19pm
UPDATED : Thursday, 19 March, 2015, 12:46am

US internet giant Yahoo will close its research and development centre in Beijing as the firm seeks to consolidate some jobs into fewer offices.

The Sunnyvale, California-based company told its 350 employees, mostly engineers and scientists, on Wednesday that the centre will shut down. Lay-offs would begin at the end of this month, a person familiar with the matter said.

A Yahoo spokesperson said in a statement: “We are constantly making changes to align resources, and to foster better collaboration and innovation across our business. Today we informed our employees based in Beijing that we will be closing our office there.”

"We currently do not offer local product experiences in Beijing but the office has served as a research and development center."

“We will be consolidating certain functions into fewer offices, including to our headquarters in Sunnyvale, California, US. Our impacted employees will be treated with respect and fairness through this transition,” the statement read.

The centre, one of Yahoo’s three global R&D centres, was opened in 2009 to find ways to expand the Sunnyvale-based firm globally and also to study search, advertising, cloud computing, among other personalised tools.

Severance packages would hinge upon how long employees have worked for the company, on top of four months’ worth of compensation, Caixin magazine reported, citing an unnamed employee.

The staff member also raised the possibility that rising labour costs in Beijing may have led to the move, saying they were two times higher than in India. 

A Yahoo executive said in 2009 that the mainland’s deep pool of engineers and scientists was the main reason for the centre to be built.

The centre operates independently from the Alibaba Group, China's biggest e-commerce firm, which controls Yahoo’s operations on the mainland. Yahoo owns around 15 per cent of Alibaba Group Holding Ltd, which it recently spun off into a separate entity in response to pressure from shareholders. 

The move adds to a growing list of foreign companies that are scaling back operations in China. Last month, Microsoft announced its plan to close two of its factories on the mainland by the end of this month, shredding about 9,000 jobs.

Computer software developer Adobe Systems shut its Chinese research and development arm in December last year, while social gaming company Zynga, which made popular game FarmVille, said last month that it had also closed its Chinese studio, axing 71 jobs.