Tencent Added to US Blacklist Over Alleged Links to Chinese Military

[summaraize]

The United States government has added Tencent to its blacklist of companies allegedly linked to China’s military. A Tencent spokesperson responded to the news, emphasizing that the company is neither a military entity nor a supplier of military products.

The blacklist comes from a 2020 executive order by the Trump administration. Its goal is to stop American companies from investing in businesses linked to or controlled by the Chinese military. While being on the Pentagon’s blacklist does not directly punish Tencent, it makes investors and businesses less likely to work with the company.

Tencent Shares Drop Following Blacklist Announcement

The impact of the announcement was felt immediately, with Tencent shares dropping 7% in the stock market shortly after the news broke. Tencent is widely recognized as the world’s largest video game company by revenue and has substantial investments in over 800 companies worldwide, including Activision Blizzard and Ubisoft. The company also owns 40% of Epic Games (developers of Fortnite), 30% of Larian Studios (developers of Baldur’s Gate 3), and 100% of Riot Games (developers of League of Legends and Valorant). Additionally, Tencent owns 16% of FromSoftware, the studio behind critically acclaimed titles such as Elden Ring and the Dark Souls series.

In a statement, Tencent spokesperson Danny Marti denied any connections to the Chinese military and expressed the company’s willingness to cooperate with the US Department of Defense to clear up what he described as a “misunderstanding”.

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

Some Chinese companies previously added to the Pentagon’s blacklist, such as Xiaomi and Advanced Micro-Fabrication Equipment, have successfully proven their lack of military ties and were subsequently removed from the list. Whether Tencent will achieve a similar outcome remains to be seen.

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[Source: Bloomberg]

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