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Yahoo said it is "consolidating certain functions into fewer offices, including to our headquarters"

Yahoo pulls the plug on China office

Internet giant Yahoo is closing its China office as part of a worldwide consolidation aimed at cutting costs, BBC reports. The Beijing research centre is Yahoo’s only remaining physical presence in the country after it sold its Chinese operations to Alibaba in 2005. A spokesperson said “around 350 jobs” would be eliminated. “We are constantly making changes to align resources, and to foster better collaboration and innovation across our business,” Yahoo said in a statement. Yahoo has been struggling to maintain profit growth in the face of growing competition from rival online search portals like Google. The Sunnyvale, California-based firm has also been trying to adapt to consumers increasingly using mobile devices, which attract less advertising revenue.

As a result, Yahoo Chief Executive Marissa Mayer has made a slew of acquisitions in a bid to diversify business and add new revenue streams. Earlier this year, Yahoo also announced plans to spin off its stake in Alibaba, China’s largest e-commerce company, which is valued at more than $30bn. The tech giant also owns a lucrative stake in Yahoo Japan. Yahoo had a global workforce of about 12,500 workers at the end of 2014.

China operations

Yahoo is the latest US technology firm to exit operations in China.  Google partially withdrew in 2010 after clashing with Chinese authorities over censorship. Earlier this year gamemaker Zynga closed its office and shed more than 70 jobs after its products failed to gain traction against local competition. Shaun Rein, managing director of consultancy China Market Research said it was very difficult for consumer-facing foreign internet players to find success in China. “Unlike rest of the world, they’re facing well-funded, aggressive home-grown players,” he said. “In China you have really strong entrepreneurship in the online space and they’re able to react quicker to consumer trends.”

Mr Rein added that it makes sense for Yahoo to “cull through headcount and business lines that aren’t making a profit”. “When you’re as weak as Yahoo globally, it doesn’t make sense to have a research and development arm in China since its too expensive.”

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