Microsoft makes so little money in China that it's closing stores & focusing online instead

Microsoft has reportedly closed all its physical stores in mainland China. The Redmond tech giant now no longer has an official store within the country, which has witnessed its operation since the early ’90s.

Reports from the South China Morning Post revealed that the decision was driven by Microsoft’s need to restructure its retail operations in the country. Microsoft had already terminated contracts with local partners operating its physical stores in China, instructing them to shut down by June 30.

That leaves third-party retailers like Taobao and JD.com becoming the official distributors for Microsoft’s products, including the new Copilot+ certified hardware like Surface Laptop 7. Or, you can still purchase Microsoft’s products through official websites instead

China, which contributed only 1.5% of Microsoft’s global revenue, managed to maintain its Microsoft stores while the company globally shifted its retail strategy in 2020 because it operated under a franchise model.

At that time, Microsoft said that it wanted to close physical stores and focus on Experience Centres in major cities like London, New York City, Sydney, and its Redmond campus.

Last year, Microsoft boss Satya Nadella said that leaving the Chinese market wouldn’t hurt his company much. He spoke to CNBC during the Ignite 2023 event amidst reports of security concerns involving China and the US, saying, “A lot of the Chinese multinationals operating outside of China are our bigger AI customers, perhaps.”

“At least for us, today, the majority of our business is in the United States and in Europe and in the rest of Asia, and so we don’t see this as a major, major issue for us, quite frankly, other than any disruption to supply chain,” he continued.