After being on the verge of becoming the first billion-dollar company in China, Tencent saw how its business in the video game industry was endangered by the restrictive measures of the government of that country. This is because Xi Jinping, the supreme leader of China, decided that the technology and games industry had side effects on adolescents and children, that they were constantly distracted, classifying them as “spiritual opium”. Measures among which is the popular restriction on those under 18 years of age, who can only enjoy their video games for three hours a week.
This is how Tencent and other big companies within China’s digital industry had to operate while being somehow caught up in a sweeping 18-month crackdown. Something that, according to The Economist, caused the giant to have to turn around some of its businesses, as well as having to cede part of its capital.
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One example of this was Tencent’s transfer of $36 billion worth of its stakes in Chinese e-commerce companies jd.com and Meituan to its shareholders as a dividend. All to try to calm the concerns of the country’s regulators, making this, added to other factors, result in Tencent’s revenues decreasing by 2% year-on-year during the third quarter of 2022, leading to its market capitalization collapsed to less than $250 billion dollars.
Given this, the company also had to focus its efforts on its WeChat, the main Chinese app that is used for different purposes, including free messaging and call services, social networks, an online payment system and also, betting heavily on Channels of WeChat, a kind of Chinese TikTok.
Short video channels that have saved Tencent, who for now can breathe easy after Chinese regulators say that the technological repression has ended, although within the country’s digital industry they remain alert since, as they say in The Economist, the communist party (which governs in China) and its restrictive measures, continue to be “a spectral presence”.
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