Chinese tech companies are self-correcting to stay ahead of potential regulatory fury
BEIJING, Aug. 11 (Reuters) – Fearing unprecedented regulatory heat for China’s tech sector, some companies are no longer waiting for official reprimands that may or may not be forthcoming.
Instead, eager to get ahead of the authorities, they decided to “self-correct”, imposing restrictions or even moving away from their own businesses.
KE Holdings (BEKE.N), China’s largest matchmaking platform for real estate buyers and sellers, is one example.
This year, it quietly shut down its VIP services that promised quick turnaround times for real estate sellers in exchange for exclusive listings and featured prominently on its popular Lianjia and Beike apps, two people familiar with the matter said.
The decision to disconnect VIP services was not prompted by a regulatory request but KE, which is currently the subject of an antitrust investigation, had wanted to move “proactively” and “voluntarily,” said people who refused to be identified. because KE has not made its actions public.
“It wasn’t a big business but it had the potential to be,” said one of the sources.
KE said in a statement to Reuters that any trade adjustments on its part “were in line with government regulations and aimed at providing better services.”
The so-called “self-correction” promises to become a major corporate trend as the government tears itself through regulatory standards to promote socialist values and curb what critics have called reckless capitalist expansion. The term is increasingly used by state media and its tone is similar to “self-criticism” – a practice promoted by the Chinese Communist Party.
THE NEW STANDARD
One of the most publicized examples was the decision by Tencent Holdings Ltd (0700.HK) this month to introduce new limits on the time children spend on “Honor of Kings,” its most popular video game. popular. It came just hours after his actions were beaten by a state media article which called online gambling “spiritual opium”.
“Everyone is trying to clearly understand the new normal and recover as quickly as possible,” said Jeffery Towson, host of the Asia Tech Strategy podcast and former investment professor at Peking University.
“No one is doing ‘go fast and break things’ anymore. No one is using their market power too aggressively. Everyone is aligning their strategies more closely with government priorities,” he said.
As Chinese regulators have cracked down on a range of industries from real estate to cryptocurrencies to private lessons, the tech sector has suffered some of the toughest measures to date.
Ant Group’s mega-list was canceled at the eleventh hour last year, while regulators in July ordered newly listed ridesharing giant Didi Global Inc (DIDI.N) to remove its app from stores in the UK. ‘applications in China.
A slew of antitrust investigations have also been launched, fines imposed, including a record $ 2.75 billion antitrust penalty for Alibaba Group Holding (9988.HK), while new guidelines and regulations have been introduced or are in the pipeline. preperation.
Other “self-correcting” companies include NetEase Music, which announced last month that it would not enter into exclusive contracts, a move after Tencent was barred by the Chinese market regulator from entering into legal rights agreements. exclusive author on music. Read more
Twitter-like Weibo (WB.O) also established an online list that ranks celebrities by popularity after a state media report criticizing 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 provide a relatively healthy competitive environment.”
Reporting by Yingzhi Yang and Brenda Goh; Additional reporting by Julie Zhu in Hong Kong; Editing by Edwina Gibbs
Our standards: Thomson Reuters Trust Principles.