Tencent Linked to Chinese Military by US

Pentagon List Includes Tencent, Causing Stock Dip; Company Disputes Designation

Tencent, a leading Chinese technology conglomerate, has been added to the U.S. Department of Defense's (DOD) list of companies with ties to the Chinese military, specifically the People's Liberation Army (PLA). This inclusion stems from a 2020 executive order by former President Trump restricting U.S. investment in Chinese military entities. The order mandates divestment from these companies, which are believed to contribute to PLA modernization through technology, expertise, and research.

The DOD's updated list, released January 7th, immediately impacted Tencent's stock price, causing a 6% drop on January 6th and continued downward pressure. Experts attribute this decline to the listing and its potential consequences for U.S. investment.

Tencent, in a statement to Bloomberg, vehemently denied being a military company or supplier. A spokesperson emphasized that while the listing doesn't directly impact their operations, they intend to collaborate with the DOD to clarify any misunderstandings. This proactive approach mirrors that of other companies successfully removed from the list in previous years by engaging with the DOD.

Tencent's global significance is undeniable. As the world's largest video game company by investment, its presence on this list carries substantial financial implications. Through Tencent Games, its publishing arm, the company oversees a vast portfolio, including stakes in major studios such as Epic Games, Riot Games, Techland, Don't Nod, Remedy Entertainment, and FromSoftware. Tencent Games has also invested in numerous other game developers and related businesses, including Discord. Its market capitalization dwarfs that of its closest competitor, Sony, by a factor of nearly four. The potential loss of U.S. investment presents a significant challenge for this industry giant.

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