Alibaba Leads China’s Internet Sales Wave Approaching $ 290 Billion

Photographer: Qilai Shen / Bloomberg

Chinese tech giants of Alibaba Group Holding Ltd. a Tencent Holdings Ltd lost nearly $ 290 billion of market value during two days of frenzied selling, as investors fightd to assess the consequences of Beijing’s broader attempt to control its most powerful private firms.

Tech stocks fell for a second day after Beijing issued regulations designed to curb the growing influence of Internet industry leaders, including JD.com Inc., Meituan and Xiaomi Corp. The Hang Seng Tech Index plunged more than 6% on Wednesday in Hong Kong, taking its two-day loss to 11%. Shares of the quintet of companies have plunged at least 11% in two sessions.

Beijing unveiled regulations Tuesday to stamp out monopolistic practices in the internet industry, moving away from a largely hands-off approach as it deals a blow to businesses in the heart of the world’s second-largest economy. The loosely worded edict landed a week after new finance restrictions triggered the suspension of Ant Group Co.’s $ 35 billion initial public offering, thwarting founder Jack Ma’s ambitions to dominate online finance in the process. . They also emerged on the eve of Singles’ Day, the event Ma invented a decade ago and turned into the nation’s biggest annual shopping spree.

“China’s tech majors will have to rethink their business models,” said Zhan Hao, managing partner of Beijing-based law firm Anjie Law Firm. “The philosophy of Internet companies is that the winner takes all and, especially for platform operators, they get user traffic and build ecosystems that are similar to each other.”

Read more: China’s crackdown on big tech puts more billionaires on notice

The Xi Jinping government is increasingly reducing the influence of private corporations that have become the country’s main growth engine. Despite sporadic crackdowns in narrow spheres, from mobile games to online counterfeits, companies like Alibaba and Tencent have mostly been free to acquire and invest in startups, becoming key sponsors of prominent startups while They build sprawling empires that now encompass e-commerce and digital finance. , social networks and entertainment.

“I was literally breathless when I first read these guidelines,” said John Dong, a securities attorney at Joint-Win Partners in Shanghai. “The moment, on the eve of Singles Day: The forcefulness and determination to remake the tech giants is amazing. “

China’s antitrust watchdog is Seek feedback on rules that establish a framework to curb anti-competitive behavior, such as collusion to share confidential consumer data, alliances that eliminate smaller rivals, and subsidize services below cost to eliminate competitors. They can also require companies operating a so-called Variable Interest Entity, a vehicle through which virtually all major Chinese Internet companies attract foreign investment and are listed abroad, to apply for specific operational approval.

“The internet giants have expanded their reach to various sectors such as finance and healthcare that are vital to the economy and that really concern regulators,” said Shen Meng, director of boutique investment bank based Chanson & Co. in Beijing. “The move could discourage companies in the tech sector from listing in the short term, as those affected will need time to adjust their businesses accordingly.”

China’s crackdown on big tech puts more billionaires on notice