Salesforce started cutting positions in China and closing its office space in Hong Kong, as a result of its tightened partnership with Alibaba.
Between 60 and 70 positions will be let go due to business adjustments in mainland China and Hong Kong. The company's business adjustment was triggered by a sharp drop in sales in China in the previous quarter, according to sources cited by SaaS news outlet Niutoushe (牛透社).
A Salesforce spokesperson told tech media TechCrunch on Wednesday that the company is "accelerating" its strategic partnership with Alibaba and "optimizing its business structure to better serve the Greater China region". "The company is opening new roles while eliminating some others,” the spokesperson added.
While the layoffs were within staff expectations, it was in stark contrast to the company's previous expansion in China. In the middle of last year, in order to better serve the Chinese market, Salesforce began to set up its first engineering team in Guangzhou and recruited software engineers at all levels.
Prior to this, Salesforce did not operate any R&D team in China. The Shanghai and Beijing offices are mainly responsible for sales and consulting, while its Asia Pacific headquarters in Singapore is mainly responsible for sales, marketing, business development, etc.
The customer relationship management (CRM) platform established an office in China in 2006. Early on, the company reached out to the market through partnerships with local tech companies and “Big Four” accounting firms.
In 2019, the American SaaS company formed a partnership with Alibaba to sell more products in the world's second-largest economy. "More and more multinational customers are asking us to support them wherever they do business in the world. That's why Salesforce announced a strategic partnership with Alibaba," Salesforce said in a statement.
Through Alibaba, Salesforce sells its cloud-based CRM solutions, including Sales Cloud, Service Cloud, Commerce Cloud, and Salesforce Platform, to customers in the region.
In recent years, China has implemented regulations to govern cross-border data processing, making it more difficult for multinational technology businesses to operate in the area. Some businesses had to split off their Chinese operations in order to comply, while others, like Airbnb, just gave up the market because it brought little revenue to the company as a whole.