Gree to shut down China office

Gree's Beijing-based office will officially cease operations on June 28 this year and all its employees will be laid off.

This decision was unveiled in an internal announcement by the company, Chinese tech site Sina Tech reported on Tuesday. However, the Japanese mobile games giant has not announced a compensation plan for employees. This latest development follows an earlier announcement it laid off over 30 employees at its North American office in December last year.

According to Sina, Gree failed to seize the opportunity to tap the mobile market despite the rise in smartphone usage, resulting in 60 percent of its revenue still coming from feature phone users. However, this user base is shrinking and the games developer still has not carved a dominant position in the market as a smartphone games platform.

The report also pointed out Gree, like most Japanese companies, have a rigid organizational structure and has many Japanese executives working in its China office, making it hard for the company to adapt to the Chinese market. 

Gree is still projecting a net profit of around 31 billion yen (US$311 million) for its fiscal year ending June 30, 2013, though it will be the first time the company will see a decline in earnings since its listing in 2008, Sina Tech noted. 

Industry watchers previously told ZDNet Asia that mobile and social game developers must look beyond simply generating revenue from their games, and diversify into different avenues in order to better monetize their products and survive the cut-throat competition.