Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Chinese tech firms 'self-correct' to get ahead of potential regulatory fury

Published Aug 10, 2021 11:34PM ET Updated Aug 11, 2021 12:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The logo of housing platform Beike, owned by KE Holdings, is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China, July 8, 2021. REUTERS/Yilei Sun/File Photo
 
NTES
-0.17%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
WB
-0.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TCEHY
-0.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BABA
-0.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Yingzhi Yang and Brenda Goh

BEIJING (Reuters) - Fretting about unprecedented regulatory heat for China's tech sector, some companies are no longer waiting for any official reprimands that may or may not be forthcoming.

Instead, eager to pre-empt authorities, they've decided to 'self-correct', imposing restrictions on or even walking away from their own businesses.

KE Holdings, China's largest platform matching buyers and sellers of real estate, is one such example.

This year it quietly shut down its VIP services that promised fast-turnarounds for property sellers in exchange for exclusive listings and which had featured prominently on its popular Lianjia and Beike apps, two people familiar with the matter said.

The decision to pull the plug on the VIP services was not prompted by a regulatory request but KE, which is currently the subject of an antitrust probe https://www.reuters.com/world/china/exclusive-china-launches-antitrust-probe-into-tencent-backed-property-broker-ke-2021-05-25, had wanted to move "proactively" and "voluntarily", said the people who declined to be identified as KE has not publicised its actions.

"It wasn't a big business but it had the potential to become one," said one of the sources.

KE said in a statement to Reuters that any business adjustments on its part "were in compliance with government regulations and aimed at providing better services."

So-called 'self-correction' is promising to become a major corporate trend as the government tears into regulatory norms to promote socialist values and rein in what critics have called reckless capitalist expansion. The term is increasingly used by state media and is similar in tone to 'self-criticism' - a practice encouraged by China's Communist Party.

THE NEW NORMAL

One of the most high-profile examples has been Tencent Holdings (OTC:TCEHY) Ltd's decision this month to introduce new limits https://www.reuters.com/technology/tencent-falls-after-china-media-calls-online-gaming-spiritual-opium-2021-08-03 on kids' time spent on "Honor of Kings", its most popular video game. That came just hours after its shares were battered by a state media article which described online games as "spiritual opium".

"Everyone is trying to get a clear read on the new normal and is resetting as fast as possible," said Jeffery Towson, host of the Asia Tech Strategy podcast and former professor of investment at Peking University. "Nobody is doing 'move fast and break things' anymore. Nobody is using their market power too aggressively. Everyone is aligning their strategies more closely with the government's priorities," he said.

While Chinese regulators have clamped down on a range of sectors from property to cryptocurrencies to private tutoring, the tech sector has come in for some of the harshest measures to date.

Ant Group's mega listing was scuppered at the eleventh hour last year, while regulators in July ordered newly listed ride-hailing giant Didi Global Inc to take down its app from app stores in China.

A slew of antitrust probes have also been launched, fines imposed, including a record $2.75 billion antitrust penalty for Alibaba (NYSE:BABA) Group Holding, while new guidance and regulations have been introduced or are in the works.

Other 'self-correcting' companies include NetEase (NASDAQ:NTES) Music which announced last month it would not enter into exclusive contracts, a move that came after Tencent was barred by China's market regulator from entering into exclusive music copyright agreements.

Twitter-like Weibo (NASDAQ:WB) also pulled an online list that ranks celebrities by popularity after a state media report critical of celebrity culture.

"The brutal growth, disorder and greed of Chinese tech companies have caused a series of problems," said Xie Pu, founder of Chinese tech website Techie Crab.

"This kind of 'self-correction' will bring a relatively healthy competitive environment."

Chinese tech firms 'self-correct' to get ahead of potential regulatory fury
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
IceIce Baby
IceIceBaby Aug 11, 2021 3:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hahaha, they think it's going to be a good strategy.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email