Alibaba, China Telecom tie up to sell phones

Chinese e-commerce leader Alibaba Group Holding Ltd and state-owned China Telecom Corp Ltd have tied up to sell inexpensive smartphones aimed at boosting mobile commerce in smaller cities and rural areas, Reuters reported.

The phones, dubbed "Tianyi Taobao Shopping Handsets", will come installed with either an app for easy access to Alibaba's flagship Taobao online shopping platform or its home-grown YunOS mobile operating system, it said in a statement late on Friday.

Buyers will be eligible for four months of free 2G data service.

The partnership is a bid to deepen Alibaba's e-commerce base in less developed parts of the country and promote its mobile operating system in a shrinking, cut-throat handset market.

Six models produced by Coolpad, Hisense and TCL would come with the Mobile Taobao app pre-installed. Mobile Taobao is China's most popular mobile shopping app with more than 200 million monthly active users, it said.

Another eight models, made by lesser-known brands including Uniscope, Ctyon and Kingsun, will run YunOS, providing buyers with an Alibaba account for shopping and cloud-based storage, and other preloaded services, it said.

Some 557 million people in China access the internet via mobile devices, according to government data. But shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry and Information Technology.

Still, mobile shopping is on the rise.

In January, Alibaba said the number of mobile monthly active users nearly doubled in the third quarter from the same period the previous year to 265 million. The proportion of gross merchandise volume derived from mobile also grew.

Alibaba has said that it has an 86 percent share of China mobile commerce market.

In February, Alibaba announced that it was taking a $590 million stake in Meizu, a relatively obscure domestic smartphone maker as it tests ways to expand its mobile operating system.