Other BriefingsChina Market Watch: Telecom Roaming Charges to be Cancelled, Starbucks Buys out JV Partner
Telecom roaming charges to be abolished by September
China’s three major telecom service providers, China Telecom, China Unicom, and China Mobile, will cancel roaming fees for mobile phone services in September, a month ahead of the preliminary deadline. They added that data and leased line fees for small and medium sized enterprises will be cut.
The move, which will affect around 80 million mobile phone users, comes as part of the government’s plan to create a stronger internet industry, as initiated by China’s Premier Li Keqiang in March of this year. Shortly following, the three telecom providers announced their commitment to the effort.
China Telecom also announced that it will remove long distance domestic call charges. The changes will also benefit users subscribed to international calling services, and services for Hong Kong, Macau, and Taiwan.
China Unicom has disclosed estimates that the removal of the fees will cost around RMB 6.4 billion in losses per year.
Starbucks to buy out its JV partner in China
Seattle-based coffeehouse chain Starbucks has announced that it will buy out the 50 percent stake in remaining stores it does not wholly own in Shanghai and the surrounding Jiangsu and Zhejiang provinces.
Its largest ever acquisition, costing US$1.3 billion, will claim Starbucks’ ownership of 1,300 stores in the region, bringing its total amount of stores in China to around 2,800.
Starbucks has already set up shop in over 130 cities in China, and hopes to expand its shop numbers to 5,000 by 2021. The chain has 600 stores in Shanghai alone, the highest concentration of any city in the world.
The company’s move comes as a reaction to slowing business in the US as consumers move away from shopping centers and high street-based shopping to online. Starbucks suffered an 8.3 percent decrease in revenue in the three months leading up to July.
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Baidu profits rebound
Chinese search engine Baidu has reported its first profits in three quarters since an advertising scandal last year, in which a student died after taking therapy advertised on the platform.
In addition to the scandal, Baidu’s slowed performance has suffered due to weak synergies and poor strategic planning, reporting a 67 percent decrease in revenue over the past year.
However, due to a recent shift in its business model and service strategy towards AI and mobile apps, the firm saw 83 percent growth in profits, reaching RMB 4.42 billion (US$655 million) in the first two quarters year-on-year.
Baidu’s shift included development of new features, such as a camera search function and an upgrade of its content quality, in addition to a commercialization of AI products, such as voice interaction systems and an autonomous driving platform. Moreover, Baidu announced a partnership with US payment company, Paypal, hoping to shore up future success.
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