AOL Closes China Base; Portal Will Continue Operating
Even as AOL (NYSE: TWX) keeps expanding internationally with portals rolled out in various countries over the last two years and buying of Bebo, the worsening economy and company restructuring now means it is doing a rethink. It has now closed down its China R&D base, shedding 56 jobs, but will continue to publish its local sites for Japan, China, Hong Kong, Taiwan and South East Asia. The Chinese portal will be controlled out of Hong Kong, the company said, but according to WSJ, the site hasn’t been updated since Tuesday. This is AOL’s second retreat of sorts from China, as IDG points out. Back in 2001 it started a JV with Lenovo to offer dial-up services and and a Chinese Web portal, but the venture was closed in 2004. This time, I think the company has realized that it is competing with many local established players like Sina (NSDQ: SINA), Sohu (NSDQ: SOHU), Netease (NSDQ: NTES) and Tom, all of whom are much bigger and integrated on the online and mobile side with operators as well. This comes as AOL also recently announced integrating all of international, including Europe and Asia under its newly-formed MediaGlow business unit. Also, yesterday, AOL handed out some more pink slips as part of the 10 percent staffing cut—roughly 700 jobs—that was announced back in January.