Enlarge image
"Intellectual Opium":
Role player at the Tencent Games booth at the Chinajoy entertainment fair in Shanghai at the end of July
Photo: ALY SONG / REUTERS
This is called anticipatory obedience: China's Internet company Tencent is restricting its multi-billion dollar business with online games such as "Honor of Kings" so that minors spend less time and money gambling. A minimum age of 12 should apply across the industry, Tencent proposed on Tuesday. There are no state regulations on this yet, just one - now weakened - comment in the state newspaper "Economic Information Daily", which in the original version complained about "intellectual opium".
"No industry should be allowed to develop in a way that destroys an entire generation," the article said.
These words were enough to shrink Tencent's stock market value by up to 60 billion dollars and to upset the entire entertainment industry in China and its international investors.
Most valuable corporation in China is falling sharply on the stock market
Tencent is not only the world market leader in gaming, but also the most valuable corporation in China, founder
Pony Ma
(49) the richest man in the country. So far, he has been considered a figurehead for China's economic power. This spring Ma was once again allowed to travel to the People's Congress in Beijing as a delegate from his home province of Guangdong, but at the same time had to compete for the antitrust authorities. Is there a threat of dismantling the now powerful digital monopolies of China, possibly even more seriously than the US tech giants in Silicon Valley? In any case, the communist leadership now seems to place much more value on social control and, if in doubt, want to sacrifice the previously celebrated global champions. Recently, state interventions at the expense of the corporations increased.
Delivery services are not allowed to speed up
At the end of July, several ministries and authorities cracked down on the "gig economy" business model, for example in delivery services. A new guideline aims to secure the labor rights of the messengers: Pay above the local minimum wage, breaks, safe helmets, access to accident and health insurance. Operators like Meituan are no longer allowed to outsource their millions of drivers to third-party companies and even have to help organize them into unions. Last but not least, algorithms are no longer allowed to make the fastest drivers the benchmark for all colleagues. Instead, moderate models are prescribed that allow couriers "adequate time to complete their deliveries". In April, an officer undercover documented the agitation of a day shift as a Meituan driver, the video went viral.In this case, too, the state profit brake cost tens of billions in market value.
Real estate companies shouldn't speculate
Also in July, property developers' prices fell after the housing ministry announced an investigation into their business practices. "Irregularities" in the permissive granting of mortgages should be addressed in the next three years. Again and again, a quote from party and state leader
Xi Jinping
(68) was sought: "Houses are there to live, not to speculate." The leadership fears resentment because large parts of the population can no longer afford to live in many metropolises due to the sharp rise in real estate prices and others are threatened with over-indebtedness if a speculative bubble bursts. Not allowing them to grow in the first place, however, also thwarted the developers' business.China Evergrande as one of the largest is currently facing debt restructuring.
Private education sector: tutoring only as a non-profit
A highly profitable business is also stalled in education.
At the end of July, the Ministry of Education stipulated that tutoring companies for school lessons could no longer make a profit, raise capital or go public.
"Advertising is everywhere, all of society is being bombarded with it," the statement said.
"That destroyed the normal educational environment."
Now the Chinese, who fear for the advancement of their children in the face of tough competition, will be spared high costs.
On the stock exchange, multibillion-dollar values were again lost in companies such as Tal Education, New Oriental Education, Gaotu Techedu or Tencent's stake Vipkid.
Investors like Softbank, who put venture capital into Chinese learning apps, can no longer get the money out of the stock market.
Same prices for everyone in online retail
At the beginning of July, the market regulator published new rules for prices in online retail.
Dumping below the purchase price is to be prohibited in the future, as well as charging different prices for the same product from different customers.
Before that, the big platforms like
JD.com, Meituan or Alibaba
had already had to undertake not to take advantage of their big data analyzes about loyal customers.
Didi slows down data protection
With reference to data protection, the Cyberspace Administration of China also removed the app of the leading transport service Didi from the market at the beginning of July.
The background to this is a new data protection law that will come into force in September.
At the beginning of next year, rules similar to the European General Data Protection Regulation are to be added.
The new rules have cross-industry consequences that go far beyond Didi, because, for example, the use of servers abroad is sanctioned.
In the Didi case, however, the crackdown was spicy because just a few days earlier the company had raised more than six billion dollars in an IPO in New York and the share price immediately drowned out.
Questionable financial power of fintech giant Ant
The new wave of interventions had already reached its first peak in November 2020, when the imminent IPO of the Alibaba fintech subsidiary Ant Group with a targeted goodwill of 315 billion dollars was stopped. Alibaba boss
Jack Ma
(56), despite the communist party book, has often clashed with the government, is not allowed to leave the country until an investigation into the Ant business model has been concluded. Basically, it is about the fear of a threat to financial stability, because Ant generously distributes credits using algorithms, but the risks end up on the balance sheets of the partner banks.
In view of the IPO, there is also the allegation that Ant helped finance the purchase of his own shares through loans to small investors - and above all that a network of influential politicians and their families wanted to enrich themselves with it.
Now local governments and the state fund, which is supposed to invest abroad, are also being investigated;
also against the regulatory authority, which approved the IPO despite the ongoing investigation into Ant practices.
The Shanghai Stock Exchange Star, launched in 2019 as China's answer to the New York tech exchange Nasdaq, must now continue to wait for great success - if one comes at all.
Investors are now faced with the question of which industries will come next in line.
ak