The Chinese government is buying shares of Alibaba, Tencent and other technology companies. This makes the executive directly involved in the decisions and strategies of companies as well. The news comes from the authoritative source of the Financial Times.
The shares acquired by the government are on average only 1% and are defined as “shares of special management“. Even such a low participation still gives Beijing the opportunity to speak on some company policies. In other words, the Communist Party of China has bought its influence over the corporate strategies of a key sector of the technology market.
The report of Financial Times underlines that the control by the government will be above all on the content side. As is already the case in other sectors and as everyone knows, the Communist Party exercises censorship and very strict control over the information and resources that the population can access. The same type of action could now affect the products of Alibaba, Tencent and the other companies involved.
In the case of Alibaba, for example, the purchase of 1% of the shares was completed last week by the state-owned investment fund headed by the Cyberspace Administration of China. According to the Financial Times, the target of the state participation is the streaming content of the video platform Youku and the web browser UCWeb.
Regarding Tencent, the purchase of shares is still under discussion. However, it seems that Tencent itself is pushing to ensure that 1% of the shares are purchased by a government agency present in the same province as the company, Shenzhen, and not directly by the investment fund which intervened with Alibaba and which, for example, he has also bought shares of one unit of TikTok.
The government’s moves and the re-evaluation of the centrality of companies in the technology sector seem to be a direct consequence of the crisis following the recent re-explosion of the COVID-19. The possible consequences of the acquisitions for the population are obviously foreseeable. If the purchase of Tencent shares is concluded, even the world of video games could undergo drastic interventions on Chinese territory.
Tencent is spooky yo. https://t.co/mgC8MSdnP1
— Jez (@JezCorden) January 14, 2023