Adobe Systems Inc. (ADBE) has announced that it will shut down its R&D operations in China owing to an increasingly unfavorable business environment in the country.
Adobe’s R&D Center in China was officially unveiled in Oct 2006. It was set up to step up the localization of its product development efforts in the Chinese and Asian markets.
Reasons for the Shutdown
Supposedly, the move was the result of hostile treatment faced by American technology firms in the country.
Following the leak of the surveillance Operation Prism led by USA's National Security Agency (NSA), the Chinese government has become very antagonistic toward American software enterprises.
Google (GOOGL) and YouTube are entirely banned in China. Microsoft (MSFT) also had some issues with the local government regarding its Windows OS in the recent past.
AnotherU.S. firm that faced the hostility of the Chinese government is chipset maker Qualcomm Inc (QCOM).
Widespread software piracy in China is also deemed responsible for the shutdown of the R&D facility.
Looking Ahead
Lay-offs have already started and around 300 people are likely to face job cuts. Only around 30 employees will be sent to the American headquarters or branch offices in India.
Research and development (R&D) operations will wind down by the end of December this year.
Adobe will, however, maintain its Chinese sales offices in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan.
Adobe currently has a Zacks Rank #3 (Hold).
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