According to local media sources and several impacted employees, Microsoft joint venture Wicresoft has halted its China operations with the US digital giant, laying off some 2,000 staff members.

Workers at the office in Shanghai of Wicresoft, a business consultancy firm based in Seattle, Washington, that was established in 2002 by Microsoft and its Shanghai partners, were notified via email on Monday that their employment with the US company “will be dissolved.”

Geopolitical Tensions Cited as Reason Behind Exit

The email stated that

“geopolitical shifts and changes in the global business environment”

were the reason behind the decision to halt work on such projects. Wicresoft, which specializes in recruiting staff, information technology, and services related to communications, offers operational, informative, and solution assistance to a number of well-known brands.

Mass Layoffs and Closure Observed in Shanghai Office

Vincent Gao, a Wicresoft employee, attested to the legitimacy of the email. According to Gao, who joined the company in 2020, the majority of the company’s business is focused on projects tied to Microsoft. According to him, Tuesday is Wicresoft’s last day of operation. During a visit to the cooperative venture’s Shanghai headquarters on Monday, the South China Morning Post observed Wicresoft employees leaving the company’s facilities in groups, bringing boxes filled with their items.

Microsoft Previously Closed an AI Lab in China

According to a report published last month by the South China Morning Post, Microsoft shut down a lab in Shanghai that was working on creating artificial intelligence and Internet of Things technologies earlier this year.

On Monday, a screenshot of an internal communication that revealed Microsoft was closing its China business went viral on Chinese social media. Caijing said it was a reference to Wicresoft, but a Microsoft representative told Reuters this was untrue.

Tech Decoupling Intensifies Between US and China

As the dispute over trade between the two biggest economies in the world grew more intense, Wicresoft’s withdrawal from China represents a further indication of the separation between the US and Chinese IT markets. In response to US President Donald Trump’s implementation of a comparable levy against Chinese imports, Beijing last Friday hit Washington by imposing a reciprocal 34% charge on American imports.