Tencent Branded a Chinese Military Company by US Government

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Summary

  • Tencent has been named on a Pentagon list due to ties to Chinese military.
  • Inclusion on the list caused drop in Tencent’s stock value.
  • Tencent claims not to be a military company and intends to work with DOD to address misunderstanding.

According to a list published by the Pentagon, global tech giant Tencent is identified as having connections with China’s military, specifically the People’s Liberation Army. This designation stems from an executive order made in 2020 by former U.S. President Donald Trump, which forbids American investors from buying or investing in Chinese military-linked companies and their affiliates. Moreover, the order mandates that existing investors must sell off any holdings from such companies as well.

These firms, thought to be supplying technology, knowledge, and research that aid the PLA’s modernization, are listed by the US Department of Defense. At first, 31 companies were cited, but more have been added over time. Remarkably, this executive order led to the removal of three companies from the New York Stock Exchange.

On the 7th of January, the Department of Defense unveiled an updated list of businesses considered to have ties with China’s military, and Tencent Holdings Limited was among those named. Through a representative, Tencent issued a response to this news in a statement to Bloomberg.

Tencent Responds to Its Inclusion on the DOD’s List of Chinese Military Companies

Our organization is not involved in military operations or supplying goods for the military. Contrary to certain restrictions or regulations, this listing does not affect our operations in any way. However, we are ready to collaborate with the Department of Defense to clear up any confusion that may exist.

In 2021, businesses no longer qualifying for military company status were taken off the roster, as Bloomberg highlights. Notably, at least two firms in recent times collaborated with the Department of Defense to get their names erased from this list. It’s suspected that Tencent aims to follow suit.

The unveiling of this list led to a significant decrease in stock prices for numerous companies mentioned. For instance, Tencent’s shares dropped by 6% on January 6th and have been gradually declining since then. Experts have noted a possible connection between its appearance on the DOD’s list and this downward trend. Tencent, a global leader in video game investments and one of the world’s largest companies overall, could face significant financial repercussions if it is indeed removed as an investment option within the US, given its inclusion on the list.

Tencent Holdings Limited, a major player in the gaming world, boasts a market value almost four times greater than its nearest rival, Sony. This digital entertainment titan manages its video game operations primarily through Tencent Games, a publishing division that either fully or partially owns several successful studios. These studios include Epic Games, Riot Games, creators of ‘Dying Light’, Techland, known for ‘Life is Strange’ developer Don’t Nod, Remedy Entertainment, and FromSoftware. Furthermore, Tencent Games has invested in numerous other well-known gaming developers and related companies such as Discord.

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2025-01-08 14:44