Tencent added to DoD's list of Chinese military companies, shares take a hit

[midian182]

What just happened? Tencent, the tech giant that has investments and ownership stakes in firms ranging from Riot and Epic to Activision Blizzard and Reddit, has been added to the Department of Defense's list of Chinese military companies. The move will not result in any immediate sanctions or export controls, but it has caused reputational damage and could make it more difficult for Tencent to continue making investments in American businesses.

Tencent appeared on an updated version of the Section 1260H list this week. The DoD's list contains the names of companies that the agency believes are part of China's "Military-Civil Fusion strategy," a national strategy of the Chinese Communist Party (CCP) to develop the People's Liberation Army (PLA) into a "world class military" by 2049 by collaborating with local firms and civilian researchers.

Tencent is the sole owner of League of Legends maker Riot Games, is a minority shareholder of Epic Games with approximately 29% of fully diluted shares, has stakes in Snap and Activision Blizzard, Larian Studios, and FromSoftware, and has invested in Reddit and Discord.

No reason was given for why Tencent was added to the list. The company said its inclusion was "clearly a mistake" and it will appeal. Tencent's Danny Marti told The Verge that the designation "has no impact on our business."

"We will nonetheless work with the Department of Defense to address any misunderstanding," Marti added.

Consequences of being on the 1260H list aren't as severe as being on the Entity list, which includes Huawei, as those on it cannot do business with US companies unless Washington issues a license. However, some organizations chose to stop working with companies after they were added to the 1260H list.

Tencent owns WeChat, the messaging platform and payment service that's incredibly popular in China. WeChat was banned from Canada's government devices in 2023 due to an "unacceptable level of risk to privacy and security."

Joining Tencent on the 1260H list is CATL, the world's largest electric vehicle battery maker whose customers include Tesla. CATL also said its inclusion was "a mistake."

Ford said it would invest $2 billion to build a battery plant in Michigan. The US automaker has said it plans to license technology from CATL.

Tencent's US-listed shares fell 7.8% following the news.

Liu Pengyu, a spokesperson for the Chinese embassy in Washington, told the BBC, "The US's practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States."

Drone maker DJI and Lidar-maker Hesai Technologies both sued the Pentagon last year for their inclusion on the list, where they still remain.

There may still be hope for Tencent and CATL. Xiaomi was added to the list in 2021 but removed just a few months later.

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Tencent added to DoD's list of Chinese military companies, shares take a hit

 

[The Talking Tech]

What took so long for them to realize that?

At this point anything from China and Russia should be considered a threat to national security.

 

[kira setsu]

They'll just slide some cash to someone and it'll just go away,

 

[trparky]

What took so long for them to realize that?

At this point anything from China and Russia should be considered a threat to national security.

Exactly. Any company that exists within a totalitarian and/or dictatorship nation should be considered to be a threat to national security.

China, for instance, requires all companies that do business inside China have a "political officer" on the board of directors.

 

[joseph mcfadden]

Exactly. Any company that exists within a totalitarian and/or dictatorship nation should be considered to be a threat to national security.

China, for instance, requires all companies that do business inside China have a "political officer" on the board of directors.

I feel there is a very very fine line between a "political officer" and say, a lobbyist. I'm sure this political officer directs the company to "do business" in such a manor to benefit that officer's government. Where as a lobbyist bribes a government official to do something that directly benefits the company. seems fairly similar to me.

not saying either way is right or wrong but so many people look at other countries all over the world and bad mouth them. the US isn't all that different....we just call it something nice and ignore the BS.

 

[trparky]

I feel there is a very very fine line between a "political officer" and say, a lobbyist.

True, but given that the Chinese government will stop at nothing to crush any dissent, you can be sure that the political officer will ensure any company operating within China aligns with the government's priorities and policies.

Companies that operate within China are often required to comply with strict regulations, which can include censorship of content, cooperation with surveillance efforts, and adherence to the CCP’s ideological standards. Failure to do so can lead to severe consequences, such as the revocation of business licenses, heavy fines, or even expulsion from the Chinese market. As a result, many multinational corporations adjust their operations, including modifying products, services, and internal practices, to avoid offending the government and to maintain access to China’s lucrative consumer base. This pressure forces companies to walk a fine line, balancing their business interests with the demands of a government that does not tolerate dissent.

 

[Inthenstus]

Don’t they own Discord, League of Legends, and like… 500 other games and social media platforms? lol, come on.. they should have known this

 

[toooooot]

Desire of Chinese companies to stay profitable while their government's desire to use them as tools to grow the nation's military might is fuscinating to me.
These two cancel out each other. As China gets stronger, the West will fear it more, cutting ties
with their most profitable companies that still try to do business in the US and other Western countries.

Perhaps, when they reach 2049 goal, they hope to l control international trade, owning it it with both soft and hard powers.

 

[Endymio]

Exactly. Any company that exists within a totalitarian and/or dictatorship nation should be considered to be a threat to national security.

Ukraine -- even before the war -- was more of a totalitarian society than any of its neighbors, including Russia. Since, it's grown far worse. Should we ban all products from Ukraine as well?

In addition to the long-standing persecution of ethnic minorities in the country, the banning of opposition political parties and all non state-run media, and the abolition of elections, the UN is now reporting extreme violations of religious rights:

"....“An analysis of the situation leads us to the assessment that the authorities of [Ukraine] have an objective of completely annihilating the Ukrainian Orthodox Church.” Believers who do not want to convert ... will be stripped of their rights, he said..."

Freedom of Religion Must Prevail in Ukraine, Even as War Drags On, Senior UN Human Rights Official Tells Security Council | Meetings Coverage and Press Releases

Everyone in Ukraine must have complete freedom to manifest and practice their religion or belief, a senior UN official told the Security Council today as she detailed restrictions on religious freedom and threats to the safety of religious communities in the country and called on both Ukraine...

press.un.org

 

[trparky]

Ukraine -- even before the war -- was more of a totalitarian society than any of its neighbors, including Russia. Since, it's grown far worse.

Yeah well, Ukraine was never the bastion of democracy that many in the media tried to present it as.