Tencent Shrinks Amid Regulatory Pressure from China

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Tencent, China's largest technology company, has chosen a 'low-key strategy' of downsizing to withstand the intense regulations imposed by Chinese authorities.

On the 17th, the Hong Kong South China Morning Post (SCMP) reported, based on analyses from corporate experts, that "Tencent is reducing the scale of its vast technology empire to endure the regulatory storm from Chinese authorities and to gain new growth momentum."

Experts predict that under this strategy, Tencent will expand investment recoveries and reduce corporate acquisitions this year. In particular, attention was drawn to Tencent founder Ma Huateng's remarks at the year-end event with employees last year, which hinted at the low-key strategy.

At the company's year-end event last year, Ma said, "Tencent is just an ordinary company that has benefited from the country's development," adding, "We are by no means an infrastructure operator and can be replaced at any time." He further stated, "In the future, in the process of Tencent serving the country and society, we must do what needs to be done and not cross the lines we shouldn't, fulfilling our role well as a helper and connector."

At the time, the market interpreted Ma's remarks as expressing his intention to keep a low profile and comply with the policies of the authorities amid the pressure on large technology companies by Chinese regulators.

Tencent has been implementing the low-key strategy early on by reducing its stakes in major e-commerce companies in China and Southeast Asia. On the 11th, Tencent announced it would reduce its stake in Sea, a Singapore-based e-commerce company known as the 'Amazon of Southeast Asia,' from 21.3% to 18.7%. The 2.6% stake in Sea is expected to be worth $3.2 billion (approximately 3.8 trillion won).

At the end of last year, Tencent also reduced its stake in JD.com, China's second-largest e-commerce company, from 17% to 2.3%. Tencent distributed approximately 450 million shares of JD.com, valued at around 20 trillion won, to its shareholders as a special dividend. Tencent's voluntary relinquishment of control over JD.com is considered unusual and is analyzed as a move made under the pressure from Chinese authorities on large technology companies.

This content was produced with the assistance of AI translation services.