Baidu Inc. and JD.com announced that they will join other big Chinese technology firms to invest about $12 billion in China’s United Network Communications Group Co Ltd (Unicom). This Shanghai-listed unit is the weakest of three big state-owned telecom firms making this deal to be part of the Chinese government’s motivation to rejuvenate state industries with private capital.
China Unicom Ltd. (NYSE: CHU) is one of the world’s largest mobile carriers by user numbers and was also added to state owned enterprises last year to see mixed ownership reform. However, their recent earnings have struggled to see an increase in an extremely competitive market. Their company is over staffed, inefficient, and slow to develop key technologies. Unicom has been falling behind state-owned China Mobile, China Telecom, and other private firms leading them to move ahead in developing cloud, big data services, and mobile software.
Last year, Alibaba Group Holdings and Tencent Holdings already invested $10 billion into Unicom. Likely to increase to $11.8 billion, Baidu plans to invest about $1.48 billion and JD.com will add on 5 billion yuan. This share sale plan will likely be finalized by late August.