Adobe has decided to close its research and development branch in China and all related operations will be terminated at the end of December 2014.

Adobe China's public relations company confirmed that after the Chinese R&D branch stops operating, the Chinese business will be transferred to Adobe India. However, Adobe will maintain its sales businesses in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan.

According to media reports, Adobe's 400 employees in China are divided into five groups and each group will get an envelope of a different color. Those who receive green ones will be the first to leave the company and the estimated departure time is the end of October; and those who get red ones will leave the company at the end of December. Sales representatives will get white envelopes and the sales department is the only department that survives the company closure.

In addition, about 30 employees will be transferred to Adobe's American headquarters or Indian branch. For pregnant employees, the company has special compensation rules since it is difficult in China to dismiss employees during pregnancy.

Adobe's report for the third financial quarter ended August 29, 2014, showed that the company's operating revenue was USD1.01 billion, a slight increase of 1% over the same period of 2013 and failed to meet expectations. Its net profit was USD44.7 million, a significant decrease of 46% compared with the USD83 million in the same period of last year.