Thirteen of China’s biggest tech companies were ordered by officials to follow stricter finance rules as the government gets tougher on tech.
Beijing is strengthening its oversight of the tech industry in a clear signal that the days of unencumbered growth are over.
Weeks after Alibaba and Ant Group felt their wrath, Chinese authorities have turned an eye to the wider fintech and financial services space. The central bank and other authorities ordered 13 tech companies in China, including TikTok parent ByteDance as well as Tencent and JD, to follow stricter rules for their financial divisions.
In the “supervision interview”, as Nikkei reported, officials told the 13 companies that they must institute tighter checks on lending and data security.
The People’s Bank of China said in a statement that internet platforms “have played an important role” in improving financial services but require greater supervision.
“Some financial services were running without licences, and there are serious rule violations in areas such as regulatory arbitrage, unfair competition and damaging consumers’ interests.”
While the orders were focused on fintech-related services, the companies plucked out for scrutiny covered a wide field, including smartphone maker Xiaomi, ride-hailing app Didi Chuxing and food delivery service Meituan.
The tide for Chinese tech companies began to change late in 2020, after years of a hands-off approach to oversight, when regulators began preparing antitrust rules that would rein in the biggest companies and stem anti-competitive behaviour.
The relationship between China’s tech industry and the powers that be seemed to take a turn for the worse when Ant Group, the fintech giant founded by tech mogul Jack Ma, was forced to shelve its mega $37bn IPO after regulatory pressure.
Weeks after Ma publicly criticised the work of central banks, authorities put the kibosh on the listing. Since then, Ant Group has been forced to restructure its business as a financial holding company, putting it under tighter financial controls.
At the same time, authorities slapped a whopping $2.8bn fine on Alibaba, the other tech giant founded by Ma.
The meeting with 13 platforms may have just been a warning to companies to fall in line, but it does not appear to be the end of Beijing wielding its hammer. Yesterday (29 April), Reuters reported that authorities are preparing a substantial fine against Tencent.
Companies will be on eggshells when it comes to plotting out their future. Didi Chuxing, one of the companies at the recent meetings, is said to be readying an IPO in the US. Unlike Ant Group, which had planned to list in both Shanghai and Hong Kong, Didi Chuxing will have to follow US rules but any drastic changes to its business structure or governance at home will have a significant effect on an IPO.