Specific examples of direct and indirect control and seizure of successful companies by the Chinese government include the following
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Alibaba and Jack Ma
- In 2020, after Jack Ma, founder of Alibaba Group, made critical remarks about China’s financial regulations, the Chinese government increased pressure on his company. Soon after, the IPO (initial public offering) of Ant Group, an Alibaba-owned financial company, was canceled due to tightening government regulations. Subsequently, the Chinese government demanded that Ant Group restructure itself into a financial holding company and restrict its business, and also imposed a hefty fine on Alibaba as a whole for allegedly violating antitrust laws. This series of actions demonstrates that the Chinese government has the power to control the economic activities of companies and force them to bend to the government’s will.
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Tencent (Taiwan) and tightening regulations
- Tencent, a Chinese tech giant along with Alibaba, has also been the target of increased Chinese government regulation: in 2021, the Chinese government introduced regulations restricting underage game-playing time for Tencent, which was making a lot of money from its gaming business. This regulation dealt a major blow to Tencent’s gaming business. In addition, Tencent’s music distribution business was also regulated from an anti-monopoly perspective, and the government’s intentions have directly affected the company’s corporate strategy.
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the Chinese government’s “community wealth” policy
- In 2021, the Chinese government announced a policy of “common wealth” that emphasizes the redistribution of wealth. In response to this policy, many large corporations have shown their willingness to cooperate with the government and have made large donations to the public good. For example, Tencent announced that it would donate more than RMB 50 billion (approximately ¥850 billion) to “common wealth” projects. Thus, although companies appear to be donating voluntarily, in reality they are compelled to follow the government’s wishes and cooperate in the redistribution of wealth.
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listing and sanctioning of [Didi Chuxing
- Didi Dexing, a major Chinese car-dispatch service company, dared to go public in the United States in 2021, but was soon afterwards severely sanctioned by the Chinese government. The Chinese government ordered DidiDesktop to suspend new user registrations and remove its app from the app store for violating privacy regulations. Thus, it became clear that the Chinese government takes strict action against companies that list their products overseas without government permission.
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nationalization and management restructuring
- The Chinese government sometimes nationalizes or restructures the management of companies that have strategic importance in a particular industry. For example, in 2021, the government tightened regulations on education-related companies, banning for-profit education businesses. This regulation caused the stock prices of listed education-related companies to plummet, effectively forcing many to restructure their management.
These examples illustrate a structure in which the government has a direct influence on the activities of successful companies and the companies must bend to the will of the government. Governments can influence their operating policies through strict regulations and policy changes without seizing and nationalizing companies, and companies accept these changes to stay in business.
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