Was the end of restrictive measures on Chinese Big Tech just a ruse? Now Beijing is getting “golden stakes” from them – Business AM
By Olivier Daelen
published on hour •
5 read a thousand
published on hour •
5 read a thousand
Alibaba and Tencent: two of the largest Chinese technology companies. And two of Beijing’s favorite targets. Now the authorities are using another strategy to keep them in their hands: buying “golden shares”.
Why is this important?
If some think 2023 will be a boom year for China’s big tech companies, they may be wrong. As the country returns to a pre-Covid era and Big Tech regulations ease, Beijing has another idea to control them.In the news : Beijing buys ‘golden shares’ of Chinese Big Tech.
- The Chinese government is busy buying “golden shares” of the country’s technology giants through funds or companies it supports.
- For Alibaba, it’s already done. For Tencent, it continues.
Explanations : What are “golden stocks”, what are they?
- The “golden shares” bought by Beijing correspond to about 1% of the capital of the respective companies. A priori, therefore, it is not very important. But, but there is.
- as explained by Financial Times, known in China as “special management shares,” these shares have special rights over certain key decisions. Thus, they can, for example, allow the owner to:
- Get a seat on the company’s board of directors.
- Having a say in the company’s business strategy and investment plans, including possible mergers and acquisitions.
- To review or even monitor content produced by the Company.
- In other words, although they constitute a very small part of the company’s capital, these shares give the owner very significant power.
- The fact that Beijing is attacking it at Alibaba and soon at Tencent is not insignificant.
Precedents
Detail : two pieces of Alibaba are already in Beijing’s wallet.
- For the first time, Alibaba said two of its divisions had about 1% of their equity taken over by Chinese government-backed entities.
- State-owned Zhejiang Media Group’s investment vehicle has taken a gold stake in video streaming company Youku Film and Television.
- WangTouSuiCheng – a Beijing-based entity under the China Internet Investment Fund (CIIF) established by the China Cyberspace Administration (CAC) – has acquired the gold-plated shares of Guangzhou Lujiao Information Technology, whose main focus is “research and experimentation”.
- The target here is the UCWeb browser control.
- According to information FTTencent is next on the list.
- Discussions continue, but it seems certain that the golden shares of one of the main operating units of the Chinese gaming giant will soon be bought by Beijing.
- “The state is not going away, this is a trend for the future,” said a source familiar with the matter.
And then? ByteDance hints at what could happen.
- Although the Chinese government was the first to acquire golden shares of Alibaba and Tencent, it has already used a similar strategy with other Big Techs such as Weibo and ByteDance (mostly known for TikTok).
- In April 2021, Beijing Beijing acquired 1% of the capital of the ByteDance Technology division through three financings.
- This allowed the government to include a Communist Party official on the branch board.
- This man was famous for once posting on his Weibo account: “I have only one wish: one day I can behead a liberal Chinese dog with Western values. To hell with the Chinese traitors who preach so-called “human rights and freedom”! “.
- It appeared that it was able to control the content of several ByteDance apps, including Douyin, “TikTok’s sister,” among other things.
- Shares of Alibaba and Tencent on the stock exchange fell slightly a few hours after this information was released.
