Situation very strange for Tencent, the company would have a link with the army according to the American government, which caused its share price to drop suddenly, in addition to bad publicity!
Tencent is judged as a military company by the United States?
In a very recent press release, shared by Bloomberg, we learn that two Chinese companies, including Tencentowner of Riot Games (League of Legends) and other video game titans, have been categorized as Chinese military companies by the government.
“The United States has charged Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd. for alleged ties to the Chinese military, targeting the world’s largest game publisher and largest maker of electric vehicle batteries in a surprise decision a few weeks before Donald Trump took office.”
(Source)
If the situation does not directly impact the activity of the two companies which can continue their work as before, it remains a bad advertisementand above all, a significant loss of value on their shares, for no reason.
“CATL, a major supplier to Tesla Inc., has joined Tencent on the federal register of entities considered to have ties to the People’s Liberation Army. Both companies protested their inclusion, saying it was in error and claiming they had no connection to the military Tencent’s stock fell more than 7% in Hong Kong, recording its biggest decline since October. CATL shares fell about 3%.”
(Source)
Recently, Xiaomi had suffered the same embarrassment, and had succeeded in having this status withdrawn, a procedure that Tencent will of course initiate.
-Tencent wants to remove this decision from the United States!
In a new press release, from Tencent this time, the company defends itself and wishes to return things to normal.
“As Tencent is neither a Chinese military company nor a contributor to the military-civil fusion of China’s defense industrial base, it believes its inclusion in the list is an error. Tencent intends to initiate proceedings “During this process, it will engage in discussions with the US Department of Defense to resolve any misunderstanding and, if necessary, initiate legal proceedings to delist Tencent.”
(Source)
The Chinese government has also decided to communicate on the subject to explain that it is not normal that this type of “sanction” can be applied, especially when there is no convincing element.
“As Tencent is neither a Chinese military company nor a contributor to the military-civil fusion of China’s defense industrial base, it believes its inclusion in the list is an error. Tencent intends to initiate proceedings “During this process, it will engage in discussions with the US Department of Defense to resolve any misunderstanding and, if necessary, initiate legal proceedings to delist Tencent.”
(Source)
It remains to be seen whether the two companies will succeed in clearing their slate!
