Microsoft has announced a significant restructuring of its retail operations in mainland China, marking a shift in the company's approach to one of the world's largest consumer markets.

The technology giant is consolidating its distribution channels, which includes the closure of its network of authorised physical retailers across the country.

The move comes four years after Microsoft's decision to shutter its branded stores worldwide in 2020, a strategy that was partially reversed for select locations in 2021, with plans to only keep Microsoft Experience Centres in London, New York City, Sydney and at its Redmond campus. However, unlike its global approach, Microsoft's presence in China has relied entirely on independent third-party retailers operating under a franchise model.

In a statement, Microsoft explained, "We continually assess our retail strategy to meet the evolving needs of our valued customers and we've made the decision to focus our channel approach in mainland China."

The company said that its products would remain available through its website and select retail partners, including storefronts on popular e-commerce platforms Taobao and JD.com.

Local reports from the South China Morning Post suggest that operators of branded Microsoft Stores on the mainland have been notified to cease operations by 30 June. A former Microsoft Store manager in Shenzhen told the outlet that while he plans to continue selling Microsoft products, he will no longer be able to promote his business as an "authorised reseller".

This restructuring comes amidst heightened political tensions between the United States and China. Microsoft president Brad Smith recently disclosed to a congressional hearing that China accounts for only about 1.5 per cent of the company's global revenue. There have also been reports of Microsoft offering to relocate some of its mainland employees overseas, potentially in response to political pressures on US firms to reduce their presence in China.

As Microsoft adapts its retail strategy in mainland China, it remains to be seen how this will impact the company's market share and consumer access to its products in the region.

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