State-owned China Unicom is ratcheting up resources to explore the consumer internet sector by establishing a platform to integrate and boost its businesses in video, music, online books, gaming and other services.
The move signals a major push in its mixed-ownership reform after the Beijing-based company attracted industry heavyweights including Alibaba and Tencent as private investors.
Lu Yimin, general manager of China Unicom, said establishing a wholly owned holding firm in the field of consumer internet is one of the key steps for the SOE to pursue innovation.
"We want to build a consumer internet ecosystem and explore ways to establish a platform different from the traditional business models to seek new growth momentum," Lu said.
The new firm, China Unicom Online Information Technology Co Ltd, will play a pillar role in integrating its consumer internet resources, which now lie in the hands of the parent group's local branches, and can make a unified decision in terms of retailing and marketing channels as well as content innovation, said Ma Yan, general manager of CUOIT.
"We will make the best use of China Unicom's edge in network resources to expand presence in the consumer sector," Ma said.
The move is also an important step to counter its arch rival China Mobile Communications Corp, the world's largest mobile carrier by subscribers, which set up a similar consumer internet platform in 2015.
But different from China Mobile, China Unicom now has a far closer link with internet behemoths including Alibaba, Tencent, Baidu and JD, all of which participated in its .3 billion mixed-ownership reform. These tech giants have tons of experience, brainpower and other resources to share with China Unicom, putting it in a better position to meet consumers' growing appetite for information services.
Chinese consumers will spend more money on information services than products for the first time in 2018, according to a report released by the China Academy of Information and Communications Technology, a government think tank affiliated with the Ministry of Industry and Information Technology or MIIT.
In this respect, Li Xiangning, deputy director-general of the MIIT's information and communication administration department, said as a result of a marriage between private firms and SOEs, the new consumer internet platform will set the tone for future innovation and upgrades in the telecom sector.
Telecom companies are facing mounting pressure as the benefits of 4G networks are nearing an end and they have to invest heavily in the R&D of 5G, the next generation mobile communication networks.