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Microsoft logo. Reuters/YonhapMicrosoft has closed more than 15 branches and joint ventures in China over the past five years, according to a report, though the company says it is not a clear-cut withdrawal and that it could expand its business there at any time. The retrenchment follows tighter regulation of foreign firms amid the U.S.-China contest for supremacy.<br>Microsoft has been reviewing an exit from the Chinese market and scaling back operations since 2023, Reuters reported on the 13th. The company's annual revenue in China amounted to just 1.5% of its global market. Citing sources, Reuters reported that some executives had weighed a withdrawal, judging the economic gains small and the geopolitical risk excessive, while adding that this did not mean leaving the Chinese market entirely.<br>Sources said the collapse of trust between the United States and China had dealt the company a major blow. Since 2017, China has pushed the use of domestically made software, whose quality has risen to a level similar to Microsoft's products. For its part, the United States has controlled exports of advanced technology, restricting Microsoft's ability to build up its artificial intelligence and cloud businesses in China.<br>Microsoft released a China government edition of Windows 10 in 2017, but it did not spread as widely as expected. Alain Crozier, the former head of Microsoft's China operations who led the business until 2021, said adoption of the edition was limited to a handful of government agencies. When Reuters reviewed six sets of procurement guidelines for Chinese government computer systems issued between December 2023 and this May, five did not recommend Microsoft.<br>In the end, it was the private sector that kept Microsoft in China. Three sources familiar with the matter said Microsoft had built a profitable business serving Chinese firms that need Western technology to manage their overseas operations, such as ByteDance, the parent company of TikTok. Helping Chinese companies expand abroad became Microsoft's largest China-related business from the mid-2020s. Even so, that business is said to account for only a negligible share of Microsoft's global revenue.<br>A failure to retain talent has also fueled talk of an exit. In 2024, Microsoft offered its top 1,000 engineers the chance to relocate to four Western countries, including the United States, but only about a third accepted.<br>Crozier, the former China head, said Microsoft had maintained a closer relationship with the Chinese government than any other technology company. Geopolitical factors sometimes caused difficulties, he said, but the company had never faced a crisis. Microsoft said it operates within a regulatory environment that applies to all foreign suppliers and that it will continue to invest in the Chinese market.

#Microsoft#China#USChinaTech#TechRegulation#CloudComputing#ByteDance<br>Original reporting by Park Si-jin for Seoul Economic Daily.<br>AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.<br>View Korean original↗Translation Policy

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