After Alibaba, China’s largest social media and gaming company Tencent recently faced the risk of being overhauled.
With speculation that Tencent will follow in Alibaba’s footsteps, China’s State Administration of Market Supervision and Administration has recently launched an anti-monopoly investigation into Tencent. A number of people familiar with the matter told Radio Free Asia that a central inspection team began to visit Tencent last week to conduct research and talk to Tencent executives about some of its business practices. (Qiao Long/Cheng Wen reports)
Multiple sources have confirmed to Radio Free Asia that several members of the central inspection team were stationed at the Shenzhen headquarters of Tencent Group, China’s largest social media and gaming company, last week to carry out a series of investigations.
One of the sources, Ms. Sun, who declined to give her full name, believes that the authorities are using the investigation of anti-monopoly as a pretext to crack down on big companies.
The central inspection team has entered Tencent, and it should be similar to Ali, saying explicitly that it is involved in anti-monopoly, (secretly) or do not want them to sit big. Now (the top) are this thinking, that entrepreneurs can not let them sit big. On the table, they say they are involved in commercial monopoly. I think this should be a direction (of the government).
Pindo Group chairman forced to step down
On the 17th of this month, Huang Zheng, chairman of China’s large e-commerce platform Poundland Group, announced that he was stepping down from his post, causing Poundland’s share price to fall for three consecutive days. According to Poundland’s fourth-quarter and full-year financial reports last year, Poundland reported revenue of more than 59.4 billion yuan in 2020, up 97 percent year-on-year.
Ms. Sun pointed out that the real situation behind Huang Zheng’s stepping down at a Time when the group’s performance is as good as it gets is a cause for concern, with all parties expressing worries about the future of the private company. On the 17th of this month, Huang Zheng announced that he was stepping down from his post, causing Poundland’s share price to fall for three consecutive days. According to Poundland’s fourth quarter and full-year financial reports last year, Poundland’s revenue in 2020 was more than 59.4 billion yuan, up 97% year-on-year.
Ms. Sun said: Huang Zheng, chairman of Poundudo, because the stock rose very high before, surpassing Alibaba, now is the most used e-commerce, and he gave equity to his team, he recently resigned, (the chairman of private companies resigned) have this trend. They (officials) are supposed to restrict large private companies.
The authorities are rectifying large Internet companies under the banner of “anti-monopoly”
According to the financial scholar Commander, the authorities have been holding large Internet companies accountable under the banner of “anti-monopoly”, but in fact they are always wary of these companies.
Commander: So it is expected that the Chinese government will now extend the scope of regulation to Tencent. This time, one company after another, first, he did find that these companies have the first signs of monopoly, the company controls China’s largest social media software WeChat. Although Ma Huateng serves as a deputy to the National People’s Congress, the government still seems uneasy about him.
Chinese Communist Party government officials have repeatedly stressed the need for stronger regulation of large technology companies to protect consumer rights. Some scholars expect Tencent to face stricter anti-monopoly investigations. The commander also believes that authorities are likely to have many restrictions on Tencent next.
Commander: Further on the Chinese government set including speech censorship, internal corporate restructuring, senior personnel adjustment, strategic direction, maybe the Chinese government party personnel to enter it, or union personnel then to interfere with the operation of the business. That’s the next concrete step to take against Tencent.
Private enterprises grow and crowd out the interests of state-run enterprises
Some scholars believe that in recent years, the efficiency of China’s state-owned enterprises has been declining, but the profits of large technology companies continue to grow at a high rate, with Tencent’s net profit reaching 100 billion yuan last year, making it a target for the government to “harvest”. Last Wednesday (24), Tencent Group announced its Q4 and annual results for 2020. The company’s 2020 revenue grew 28% year-on-year to 482.064 billion yuan, and net profit (non-IFRS) was 122.742 billion yuan, up 30% year-on-year. Currently, Tencent Holdings has a market capitalization of more than US$700 billion, making it the highest listed company in Hong Kong by market capitalization.
Tencent Holdings founder Ma Huateng recently admitted at an earnings press conference that he took the initiative to meet with officials from China’s anti-monopoly regulator to discuss the company’s compliance issues during the two sessions earlier this month. Ma’s action suggests that China’s unprecedented anti-monopoly drive, which began late last year, may soon target other Internet giants. Jack Ma‘s Alibaba business empire was the first to bear the brunt last year.
Late last year Beijing introduced several measures to crack down on Ma’s Ant Group and other private financial institutions, which were not allowed to steal deposits from state-owned banks, and the effect was quickly seen as a result of collecting deposits for small and medium-sized banks. By January this year, state-owned banks’ structured deposits, compared to December 2020, increased by 575.66 billion yuan, an increase that turned from negative to positive, ending the previous trend of eight consecutive months of decline.
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