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Seattle-based software behemoth Microsoft has bought a chunk of the Chinese television market in a deal with TV maker Sichuan Changhong Electric said to be worth 94.1m yuan ($12.32m).

The firm, which is one of China's biggest electronics manufacturers, said in a statement on Monday that Microsoft had agreed to work closely with Sichuan Changhong on development, production and marketing of television, PCs and other digital entertainment products.

According to various reports, Microsoft will hold a stake in the firm of less than one per cent after agreeing under a memorandum of understanding (MOU) to buy 15 million shares of Sichuan Changhong at 6.27 yuan ($0.82) each in a private share placement.

The MOU is often struck by firms as a strategic move to develop and market digital home entertainment products.

It is not immediately obvious why the US software giant has displayed a sudden spurt of interest in the Chinese TV-maker market.

But, according to Sichuan Changhong's website, the two firms had previously signed a strategic cooperation agreement in June 2004 "in the field of multi-media entertainment," which suggests they had been in talks for sometime.

However, Microsoft has also been talking up its plans to go beyond the TV box with the announcement on Monday of the latest update to its IPTV software which has been rebranded as Microsoft Mediaroom.

Microsoft's TV VP Enrique Rodriguez said: "There are several reasons why we felt a new brand is instrumental to our success and the success of our customers.

"With personal media sharing and new Web-based applications, Microsoft brings the consumer television experience to a new level that goes beyond the TV set." ®

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