Under pressure from investors to cut expenses, Yahoo is closing down its last remaining office in China, a move expected to eliminate 200 to 300 jobs.

Marissa Mayer, CEO, Yahoo

Marissa Mayer, CEO, Yahoo

The closure of the Beijing office, which housed a research and development center employing engineers, was announced to employees on Wednesday, CNET reports. The staff there accounted for about 2% of Yahoo’s global workforce.

“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,” Shaun Rein, managing director of China Market Research in Shanghai, told Bloomberg. “Yahoo doesn’t have significance in China. Yahoo can’t really recruit top people and Chinese firms are not going to advertise on Yahoo.”

Since October, the company has cut between 700 and 900 employees in locations including Bangalore, India, and Canada as part of chief executive officer Marissa Mayer’s efforts to rein in costs, IDG News Service said. Activist investor Starboard Value has urged Mayer to cut at least $500 million in expenses.

Mayer said in January that Yahoo 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.

Yahoo shares have gained 13% in the past year, according to Bloomberg, buoyed in part by the company’s stake of about 15% in Chinese e-commerce giant Alibaba. Earlier this year, Mayer unveiled plans for Yahoo to spin off its Alibaba holdings, which are valued at more than $32 billion.

The stock was up about 1.4% at $45.29 in trading Thursday.

“Yahoo has had a sometimes rocky experience in China,” CNET reported, noting that in 2007, it settled a lawsuit alleging it supplied the Chinese government with information that led to journalist Shi Tao being sentenced to 10 years in prison.

Under new cybersecurity rules due to go into effect this month, foreign-based tech companies operating in China will be required to disclose secret source codes and submit to intrusive audits.


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