Business Intelligence on Retailing, Franchising, and Consumerism in China

Microsoft Takes Minor Changhong Stake

Seeking to spread its reach throughout China, Microsoft has reportedly taken a small stake in China's Sichuan Changhong Electric Company.

The companies have inked a letter of intent for Microsoft to purchase 15 million Changhong shares for a total of RMB94 million. Changhong's stock is currently traded on the Shanghai Stock Exchnage, and Microsoft's purchase equates to less than one percent of the total outstanding shares for Changhong.

The agreement starts a project called Media Galaxy, where the two companies will seek to harness the power of the Internet to power and enhance consumer electronics.

Just last month, domestic electrical appliance retailer Gome has signed a big deal with Changhong for the second half of this year. The total value of that agreement is RMB1 billion, and Changhong says that the reason they signed this agreement with Gome is to promote the mutual development of both sides and increase their sales volume.

The local media believe that the cooperation with Gome also shows China's national color TV manufacturers have begun to seize more market share by adjusting their market strategy.

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