Unicom and Tencent Set Up Joint Venture Company Yunzhou Shidai

According to the Tianyancha App, Unicom Venture is a wholly-owned subsidiary of China United Network Communications Group Co., Ltd., while Tencent Industry Venture Capital is a wholly-owned subsidiary of Tencent Group. One is one of the three major telecom operators, while the other is an internet giant. When the cooperation announcement was issued last November, the market was already buzzing. This cooperation focuses on content delivery networks (CDN) and edge computing services, where the two parties can complement each other's strengths and achieve a win-win situation.

CDN refers to servers, which are essential infrastructure for video streaming and video-on-demand. Edge computing places servers closer to the end-users and is different from traditional cloud computing. Edge cloud computing is more real-time, has more bandwidth, lower energy consumption, and offers advantages such as data security and privacy. In short, CDN is transmission, and edge computing is auxiliary transmission. The combination of the two can achieve precise marketing and information transmission, providing users with real-time and high-quality network services.

For Tencent, the current charge for WeChat's meeting function has made it a demand-side for CDN and edge computing. Therefore, this investment is an expansion upstream of the industry chain, which can enhance Tencent's bargaining power for related service purchases and further enhance its cloud computing capabilities.

For China Unicom, actively expanding its infrastructure and developing cloud businesses can diversify its business and reduce its dependence on communication tariff revenue. At the same time, the joint venture model can make a particular business more flexible. In the future, China Unicom can explore more space in financing and pave the way for business development.

As we can see, the cloud market is no longer just for internet customers, but also for government and enterprise customers, which is the telecom operators' playing field. On the one hand, in the first half of 2022, the market share of the top two cloud service providers, Alibaba Cloud and Tencent Cloud, has slightly declined. On the other hand, since 2020, the three major telecom operators have all made efforts in cloud services and have shown surprising growth rates. In 2021, China Unicom's cloud business revenue was CNY 16.3 billion, a year-on-year increase of 46.3%. In the 2021-2022 fiscal year, according to financial statistics, China Telecom received 104 orders for digitalization projects over CNY 100 million, China Mobile received 68 orders, China Unicom received 34 orders, and Alibaba Cloud and Tencent Cloud each received nine orders. This is proof that the cloud market is gradually shifting towards government and enterprise customers.

At the same time, with the intervention of state-owned communication operators, capital development will be guided in an orderly manner, which is a step forward for Tencent, which has been hanging in the air. We look forward to seeing how the new cooperation between China Unicom and Tencent will bring changes to the industry.

At this critical stage, the ESG2023 "the US Sub-Forum" will be held in Shenzhen on June 2, 2023. EqualOcean will invite the representatives of academic institutions and investment institutions, as well as company leaders, from the International Studies Institute of Fudan University, Sun Yat-sen University, Jinan University School of International Relations, Gaorong Capital, Vision Plus Capital, FreeS Fund, ZWC Partners, Source Code Capital, Niu Technologies, TikTok, SHEIN, NEIWAI, miHoYo, Tuya, MINISO, Dreame, Ecovacs, WYBOTICS, Lifen, and UniUni.EqualOcean analysts will also release the US Report 2023 at the US Sub-Forum, summarizing business opportunities and best practices for expanding into the US market in the new stage. 

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