Microsoft to acquire 1 per cent in Chinese TV maker for $12 million

19 June 2007

Mumbai: US software giant Microsoft Corp. will acquire a one per cent stake in Sichuan Changhong Electric Co of China for $12.3 million (94 million yuan) and form a cooperative alliance with the TV and electrical appliance maker, the Chinese company said.

The two companies will also cooperate in developing and marketing TVs, computers and other digital home-entertainment products, Sichuan Changhong said in filing with the Shanghai Stock Exchange.

The project will face challenges that have dogged several such collaborations in the past, but the market is now more mature and
The deal provides Microsoft a stepping stone to to the vast Chinese market and an alliance with a potentially key player.

"Changhong is a state-backed company, so for Microsoft to get 1 per cent is still quite significant," said an analyst.

He said Microsoft may revive its "Venus project" - an operating system that would allow Chinese electronics firms to combine a web browser, PC and video compact disc player in a single box atop TVs.

The project failed, because of low-speed internet connections and lack of good content. China has since become the second-largest internet market after the US , with around 140 million web users and growing use of high-speed broadband.