Little Fanfare as Yahoo Leaves China

Yahoo’s decision to close its last remaining operations in China – a research and development center in Beijing – will have little impact on the country’s digital industry, experts say, as the company has been largely dormant in the region for the past several years.

Yahoo China has had limited operations in China since it was acquired by Alibaba as part of a strategic partnership with Yahoo Inc. in 2005. In 2013, the www.yahoo.cn Web portal was closed and users were given the option to transfer their existing Yahoo China mail accounts to other Yahoo sites or to Alibaba’s Alimail platform.

Foreign technology and social media companies, including Google, Facebook, Twitter, and Instagram, have all faced a hostile regulatory and operating environment in China, as well as competition from local tech giants Alibaba, Baidu, Tencent, and Weibo, but experts say Yahoo’s decision to pull out of China has just as much to do with cutting costs.

“If they are closing the office, it’s because they no longer have user interest and the business is falling off,” says one insider, who requested to remain anonymous.

“It’s no big deal because nobody cares about Yahoo in China,” says another anonymous source. “It’s a facility for research and development only, with no actual visibility. The Yahoo brand has been dumped in China since the operation was taken over by Alibaba many years ago.”

But from a search industry history point of view, Yahoo’s China departure is significant, says Motoko Hunt, president and search marketing consultant at AJPR.

“Yahoo was one of the first well-organized portal sites with a search function for people to get to know the World Wide Web until Baidu and other locally grown search engines and portal sites came out,” says Hunt.

“While the operation may have been passed onto Alibaba, the office closure symbolizes the end of an era, and shows how difficult it is for Western businesses to be successful in the Chinese market.”

Hunt adds the closure emphasizes the difficulties for foreign companies, especially Western companies, to understand, localize, and adapt to Chinese and other Asian regional markets.

“I give credit to Yahoo that it tried to do that over the years, but it shows how difficult it is for a local team to be heard within a huge corporation to get what they need to grow market share.”

In a statement, Yahoo said it was constantly making changes to align resources, and to foster better collaboration, and innovation across its business.

“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, U.S,” the statement said.

The Beijing office closure, which will see its estimated 200 to 300 employees laid off, forms part of a number of cost-cutting redundancies across Yahoo’s global network over the past six months.