(Bloomberg) — Morningstar Inc. is slashing a significant portion of its workforce in Shenzhen and relocating jobs to other countries as part of a restructuring exercise in China, a retreat that reflects a growing global ambivalence over doing business in the world’s second largest economy.
Several hundred people among its 1,000-strong workforce in the southern technology hub have been affected, the Chicago-based financial services company said on Wednesday.
The roles will be moved to other offices including in Mumbai, Madrid, Toronto and Chicago, with Chinese operations to now focus solely on the domestic market, a company representative said.
The operations to be relocated elsewhere mainly involve the company’s global support team, which provides data and information technology services to different regions across the world, a person familiar with the matter, who asked not to be identified as they’re not authorized to speak publicly, said separately.
“This decision was necessary in the increasingly complex business environment,” Chief Executive Kunal Kapoor wrote in a company memo dated July 11 seen by Bloomberg. “We remain motivated by the potential the China market offers, and we’re in the process of defining a new strategy for China market growth.”
The winding down will take place over the next 12 months, according to the memo. Data specific to the China market will continue to be collected within the country, it said.
Morningstar’s shift out of China is one of the biggest yet among American financial firms operating on the mainland, and comes as Wall Street’s biggest banks struggle with Covid-19 lockdowns, volatile markets and state interference in China. The country’s zero-tolerance approach to the virus is proving particularly disruptive, with businesses at risk of getting caught in a cycle of shutdowns and reopenings, as well as near-constant testing for residents.
The group, which provides services including financial research and investment management, also has operations in other Asian countries such as Singapore and Thailand.
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Beyond financial services, the consumer sector is facing a wave of nationalism that’s seen boycotts of foreign companies including Nike Inc. and Hennes & Mauritz AB after both said would stop using cotton from China’s contentious Xinjiang region. Issues ranging from human rights to national security have also led to a deterioration in the relationship between China and many Western countries, and the US has used blacklists to restrict the activities of certain Chinese companies.
Founded in 1984 by Joe Mansueto, Morningstar entered China in 2003 by forming a research firm in Shenzhen and currently also has an office in Shanghai. Its employees across China include technologists, analysts and researchers, and it was one of the first companies to obtain a quantitative fund rating service qualification from China’s securities commission, according to the company. Morningstar’s operations in China represented the group’s largest technology development and data center outside the US, according to a document in 2014.
(Updates with details about Morningstar operations in Asia)
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