China is home to many tech giants and over the years, such companies accumulated a lot of power and wealth. However, the situation started to change in 2021. Authorities in China introduced a slew of legislation in the past several months, largely aimed at the tech sector. The country’s decision to introduce various regulations spooked investors and wiped out billions of dollars in value from the country’s internet giants.
The legislative assault began in November of 2020 when the initial public offering of Ant Group was suspended. Furthermore, regulators introduced anti-monopoly legislation focused on the so-called “platform economy”. Regulations introduced by Chinese authorities also aimed at bolstering critical data security and protection laws. As a result, world-famous companies faced investigations as well as punishments.
Tech giants and risk factors
The country already passed a lot of marquee laws, but it is still hard to tell what to expect from authorities. Several days ago, Chinese tech stocks saw a huge one-day rally. But after the rally, the tech stocks fell once again, highlighting the cautious approach from investors wary of regulatory risks.
Chinese tech giants have to deal with other issues as well. Tensions between the U.S. and China continue to dominate the headlines for several years. Tech giants not only from China but other countries are trying to adapt to the ever-changing environment. Tech giants Tencent and TikTok owner ByteDance suffered losses due to tensions between the world’s largest economies. Another example is Huawei as it is still trying to cope with challenges created by Trump’s administration. It could take years to solve all issues.
Also, Chinese companies listed on U.S. stock exchange could face stricter listing as well auditing rules. Many Chinese tech giants carried out secondary listings in Hong Kong to hedge against these risks.