China’s internet and telecommunications companies, led by Ciro Telecom Co., have struggled to respond to a wave of market volatility that has rocked the world’s second-largest economy, the world said Wednesday.
The Ciro group, which includes a major telecom company, CITIC, is one of the few Chinese firms with a long-term plan for the sector.
It has been grappling with rising market pressures as more and more of the country’s internet customers switch to cheaper services from the U.S., the U-K., the European Union and other emerging markets.
Ciro’s strategy is to make sure that it’s able to handle the disruption, said Richard Bove, the Asia-Pacific chief economist at UBS in Hong Kong.
It plans to focus on building its domestic infrastructure, Bove said in an interview.
“I don’t think it is a failure,” he said.
The Ciro Group was founded in the early 1980s by former telecoms executives and has a history of winning contracts.
The company has made significant investments in internet infrastructure in the past, including building a fiber-optic network to connect the Chinese city of Chengdu with the U, U-S., European Union, and Asian countries.
It recently launched a new service in the U., with a new price tag of $40 a month.
Its strategy has included raising prices and introducing more attractive packages for customers to keep them in the loop, Bovaird said.
“Ciro is now able to deal with this,” he added.
The firm’s share price fell 6.5% to 4,638 yuan ($8.93) on Wednesday, compared with a gain of 1.3% in the benchmark Shanghai Composite Index.
The S&P 500 index of stocks fell 2.2%.
China’s stock market is now trading below its 2008 peak of nearly 17,000 yuan a share.
Investors are concerned that the economic slowdown in the country will force them to cut back on their purchases of stocks, and the country has been struggling to contain the surge in the price of gold.
China’s central bank said in March it would cut its benchmark lending rate to 6% from 7% and will cut interest rates to 3.5%, the second-lowest in the world.
In the past year, the government has announced plans to spend $1.6 trillion on infrastructure projects.