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 The California-based company will maintain its China sales offices,
Adobe said in an e-mail to Reuters on Wednesday, but research and
development (R&D) operations will cease by the end of December.
Lay-offs have already begun and will affect more around 300 people,
a person familiar with the matter told Reuters.
Foreign companies, particularly U.S. technology firms, have come
under increasing scrutiny in China as Beijing pushes hard on
information security in the wake of last year's cyber espionage
revelations by former U.S. National Security Agency contractor
Edward Snowden.
The government has also ramped up investigations into foreign
companies operating in China, wielding a 2008 anti-monopoly law to
probe numerous firms' local practices. Western business lobbies have
labeled the tactic as protectionism.
"The overall climate in China against Western enterprises has been
quite negative and that's one of the major reasons," said the
person, who declined to be identified because of the sensitivity of
the issue.
The closure of Adobe's China R&D arm is also affected by rampant
software piracy in the country, as well as the company's shift
toward a cloud-based software-as-a-service business model and away
from one-off boxed sales of software and licenses, the person
familiar with the situation said.
"Adobe's presence in China will be focused on market development
activities moving forward, and it will be dissolving and closing its
research and development (R&D) branch there," the company said.
"Adobe will maintain its sales presence in Shanghai, Beijing,
Guangzhou, Shenzhen, Hong Kong and Taiwan."
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Other U.S. technology firms which have drawn the ire of China's
government include software giant Microsoft Corp and chipset maker
Qualcomm Inc.
Microsoft is the target of an anti-trust investigation for suspected
issues concerning its Windows operating system and Microsoft Office.
The probe has been described as "Kafka-esque" by experts because of
Microsoft's negligible revenues in China due to piracy.
Last week, Adobe reported its worst quarterly revenue for Asia in
the last five years. For the three months ended August 29, sales in
Asia fell 25 percent to $148.2 million.
(Editing by Ryan Woo)
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