Microsoft scales back China operations, leveraging Chinese enterprises' demand for overseas expansion to maintain its market window.

According to Reuters, Microsoft has closed at least 15 branches and joint ventures in China over the past five years and considered exiting the Chinese market in 2023, but currently has no plans to exit. Affected by Sino-US geopolitical tensions, China's push for domestic software substitution, and US restrictions on advanced technology exports, Microsoft's expansion in government, cloud computing, and artificial intelligence businesses in China has been hindered. However, Microsoft has formed new profitable businesses by providing Azure cloud services and access to overseas AI models to Chinese companies going global such as ByteDance and Shein. Meanwhile, Microsoft still hopes to retain Chinese engineering talent, but affected by export controls and talent drain, it has expanded its research presence in Vancouver, Singapore, Tokyo, and other locations.