BEIJING – Following a series of high-profile crackdowns on Chinas tech giants over the past two years, the worst appears to be over.
Last week, a top regulatory official said in an interview that the rectifying of bad practices by big tech firms is basically complete. Meanwhile, Chinas top anti-graft watchdog, the Central Commission for Discipline Inspection (CCDI), notably left out the mention of platform companies, a catch-all term referring to tech firms, in a statement following its first meeting of the year.
But those in the industry say it cannot be taken for granted that tech firms are now in the clear. Firms will also have to navigate a new normal under the watchful eyes of regulators, they say, where growth can be deemed excessive at the drop of a hat, resulting in heavy penalties.
In an interview with the official Xinhua news agency published last weekend, head of China Banking and Insurance Regulatory Commission Guo Shuqing said the government will promote the healthy development of Internet firms in a bid to prop up private businesses.
The special rectification of the financial business of 14 platform companies is basically completed, and a few remaining problems are also being resolved promptly, he said without going into details.
Following that, normalised supervision will be implemented to encourage platform companies to operate in compliance with regulations.
In yet another sign that the tech firms are no longer an area of concern, the term platform companies was left out of the CCDIs post-meeting communique. In contrast, the 2022 edition said the anti-graft watchdog would focus on investigating the corruption behind capitals disorderly expansion and platform monopolies.
While this is official confirmation that were off the hook in a way, it really doesnt matter any more because the damage has already been done, said a government relations executive at a major tech firm.
She, like the other industry insiders The Straits Times spoke to, declined to be named, so they could speak openly about government policy.
Over the past two years, everyone can see how rules can change at the drop of a hat. One minute youre preparing for a foreign listing and the next moment youre under investigation, she said.
There are also these new rules we now have to abide by, which makes doing business very difficult. The era of high growth is over.
Another tech executive who oversees game development said the climate has become increasingly inhospitable for companies who want to expand internationally.
Any company with a sizeable user base, meaning at least one million users, needs to apply for permission from the government to move data out of the country. Its untenable, he said.
Beginning in November 2020, the sector came under probe for a slew of practices including monopolistic behaviour and mishandling of their troves of user data, while others were taken to task for expanding into financial services.
Most of the countrys biggest firms ranging from tech giant Alibaba to food delivery platform Meituan to Tencent, which runs the countrys biggest chat app, WeChat have come under probe and been slapped with billions of yuan worth of fines. More On This Topic Jack Ma: Alibaba tycoon who soared on China's tech dreams grounded by regulators China tech stocks winning back investors after awful year Hardest hit, however, appears to be ride-hailing platform Didi, previously best known for edging Uber out of the Chinese market. Since its New York listing was scuppered by Chinese regulators in July 2021, its app has been taken off all app store platforms, rendering it unable to register new users till this day.
It was part of a drive to better regulate the tech industry, which has done extremely well over the past two decades under lax supervision.
But for many tech firms, the cautionary tales of Alibaba and Didi have been enough to put a damper on any expansion plans.
I had a foreign colleague who was initially brought on to help with our international expansion, but after we saw what happened to Didi, where even their mainland business was hit, none of us even dare think of anything beyond our borders, the gaming executive said. More On This Topic Didi shows China's tech giants must first answer to Beijing As Beijing takes control, Chinese tech companies lose jobs and hope
