Big Tech China redirects investment to US

China has begun to tighten its antitrust laws, prompting Chinese tech giants to seek ways to funnel money into the US.

Gateway to America

Over the past few months, China has begun tightening antitrust laws targeting domestic tech companies that are about to go public.

In fact, in the past, many Chinese companies have penetrated the US for a long time through different routes. This group called Big Tech China includes Tencent, Alibaba, Huawei, Xiaomi, ByteDance and Baidu.

Since 2017, Internet giant Tencent has had a controlling stake in half of the 25 or so funds of Chinese companies that issue American Certificates of Deposit (ADR). Roughly, ADR is a form of security for foreign companies like Tencent to access the capital market in the US without having to be listed on the US stock exchange directly.

Ant Group’s Alipay (Alibaba affiliate) and Tencent’s WeChat Pay outside a currency exchange in Hong Kong, China.

E-commerce giant Alibaba also holds shares in some of these 25 names, while other tech giants such as Xiaomi phone maker, shopping platform Meituan or search platform Baidu also have shares. share in one or two of these funds.

Although a technology company incubated in Shenzhen, Tencent has long been known as a giant that invests in foreign game companies, especially in the US.

Tencent’s holdings in public companies over the past year have grown by 785.11 billion yuan ($112.7 billion) with profits reaching more than 160 billion yuan ($25 billion), according to the report. corporation’s annual report. This figure does not include revenue from subsidiaries such as Riot Games.

Tencent is also listed on the Hong Kong Stock Exchange as the largest company by market capitalization.

Last week, Tencent was notified by Chinese authorities to postpone the merger of two livestreaming platforms Huya and Douyu based on Beijing’s antitrust regulations. Both of these Tencent subsidiaries have been listed on the US stock exchange in the past three years.

Tighten regulations

For startups in the mainland, being funded by Big Tech China means being able to reach a huge customer base.

By the Internet industry in China is very cruel. In a book published in 2018, author Kai-Fu Lee, who once headed Google China, describes the battle of domestic companies as the ancient Roman arena where nothing is limited, from blatant theft of patents to launching a smear media campaign.

After years of deregulation, China has begun a widespread crackdown on tech giants at home in the past few months.

Big Tech China redirects investment to US
Didi’s IPO did not go smoothly.

Funded by Tencent, ride-hailing app Didi was listed on the US stock exchange on June 30. But within the past five days, Beijing has launched a comprehensive investigation into the use of user data by Didi and its US-listed subsidiaries.

The Cyberspace Administration of China (CAC) said it had asked Didi to stop accepting new user registrations.

Last week, the CAC also announced that companies with the data of more than 1 million users need to be approved before going on a foreign exchange.

China’s increased surveillance of technology companies’ data stemmed from a joke made by billionaire Jack Ma last year, which eventually led to the 57-year-old billionaire’s Alibaba being fined by the authorities. ,8 billion USD.

Phuong Nguyen (according to CNBC)

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