Tencent Branded a Chinese Military Company by US Government

Chinese tech conglomerate Tencent has been named on a list released by the Pentagon of companies with ties to China’s military, the People’s Liberation Army. Tencent’s new status is the result of a 2020 executive order issued by then-President Donald Trump, which prohibits United States investors from purchasing or investing in Chinese military companies and their subsidiaries. The executive order also requires divestment by investors from any such companies.

These companies — which are believed to contribute to the modernization of the PLA by providing advanced technology, expertise, and research, for example — are identified on a list maintained by the US Department of Defense. Initially, 31 companies were named, though more companies have been added since. This executive order immediately resulted in three companies being delisted from the New York Stock Exchange.

On January 7, the DOD released its latest iteration of the list of companies identified as Chinese military companies, and Tencent Holdings Limited was on it. Via a spokesperson, Tencent was quick to respond to the development in a statement to Bloomberg.

Tencent Responds to Its Inclusion on the DOD’s List of Chinese Military Companies

We are not a military company or supplier. Unlike sanctions or controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding.

This year, several companies that no longer met the requirements for designation as a military company were removed from the list. And as Bloomberg points out, at least two companies in recent years have worked with the DOD to successfully have their names removed. It’s assumed that Tencent intends to do the same.

The release of this list caused a drop in stock value for many of the companies named. Shares of Tencent fell by 6% on January 6 and have trended slightly downward since, with experts acknowledging a correlation with its inclusion on the DOD’s list. Tencent is the largest video game company in the world, in terms of investments, and is one of the largest companies in the world in general. So its inclusion on the list and its potential removal as an investment option in the US could have major financial implications.

A giant in the games industry, with a market cap nearly four times that of its closest competitor, Sony, Tencent Holdings Limited runs its video game business through its publishing division, Tencent Games. This division is an owner or partial owner of a number of successful studios, including Epic Games, Riot Games, Dying Light’s Techland, Don’t Nod of Life is Strange fame, Remedy Entertainment, and FromSoftware. Tencent Games has also invested in dozens of other well-known developers and related companies like Discord.

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Tencent

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Date Founded

November 11, 1998

Headquarters

Shenzhen, China

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CEO

Zhang Zhidong

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Known For

League of Legends
, Contra

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