Earlier, it was rumored that Tencent Holdings was asked by the Chinese Communist Party regulator to set up a financial holding company. A few days ago, Tencent’s management responded that Tencent would “actively participate in the study” of setting up a financial holding company under the premise that regulation would enable the industry to develop more healthily.
On March 24, Tencent Holdings announced its annual results for 2020 after the market closed, with performance slightly exceeding market expectations. Last year’s annual net profit was 159.85 billion yuan, compared with market expectations of 129.226 billion yuan and 93.31 billion yuan in the same period last year. 2020 annual revenue was 482.064 billion yuan, up 28% year-on-year.
However, the outside world is more concerned about how Tencent will respond to its anti-monopoly regulation by the Chinese Communist Party authorities.
A Reuters 24 report quoted sources as saying Tencent Holdings founder Ma Huateng attended the Communist Party’s two sessions in Beijing this month and met with officials from the Communist Party’s antitrust regulator two weeks ago to discuss matters related to the group’s compliance with regulatory requirements. Sources said Tencent is expected to be the next company to face stricter anti-monopoly regulatory investigations.
The report mentioned that the Communist Party’s State Administration of Market Supervision and Administration is collecting information and investigating WeChat‘s monopoly practices.
At the results conference, Tencent confirmed that it is in talks with the Communist Party’s anti-monopoly regulator.
“It will actively cooperate with the regulator.” Ma Huateng said at the results conference, “The media reported that I met with the anti-monopoly department, which is an autonomous, regular meeting in which we talked about a number of topics …… We emphasized that we attach great importance to compliance and will always comply with the requirements of compliance.”
Earlier market rumors suggested that Tencent might be required to set up a financial holding company.
Tencent President and Executive Director Liu Zhiping responded at the results meeting that Tencent would actively participate in studying the matter under the premise that regulation makes for healthier industry development. He said that if Tencent were to set up a financial holding company, the impact on the company’s business would be neutral, as it would only be “a change in organizational structure.
He stressed that Tencent attaches importance to compliance and risk control in the financial technology business, and will exercise self-restraint in terms of scale to achieve a “comfortable level”.
At the end of last year, Ant Group’s plan to go public was halted by the Chinese Communist Party authorities. In January, foreign media reported that Ant Group would set up a financial holding company to incorporate all its businesses, including blockchain and Food delivery technology products, into the holding company, subject to strict supervision by CCP regulators and meeting corresponding capital requirements, and that Ant Group would be transformed from a “financial technology company” to a “financial holding company. Ant Group will be transformed from a “financial technology company” to a “financial holding company”.
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