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British Defence Start-up Ditches Blacklisted Chinese Tech Giant

AInvestSaturday, Jan 11, 2025 9:18 am ET
3min read



In an unexpected turn of events, British defence start-up Hadean has announced its intention to cut ties with Chinese tech giant Tencent, following the latter's blacklisting by the U.S. Department of Defense. The move comes as a response to the escalating geopolitical tensions and the potential risks associated with maintaining a partnership with a company alleged to work with China's military.

Hadean, which specializes in AI and simulation tools used by the Ministry of Defence and NATO, had previously received a minority investment from Tencent. However, the company has decided to replace Tencent as a shareholder, citing the changed geopolitical situation and the potential reputational damage that could arise from being associated with a blacklisted company.



The U.S. Department of Defense added Tencent to its list of companies alleged to work with China's military, aiming to highlight and counter China's "military-civil fusion" strategy. The designation blocks U.S. officials from having dealings with Tencent from next year, potentially affecting the company's commercial progress, particularly if it wants to do business in the United States.

Tencent, which owns the popular messaging app WeChat and a vast gaming empire, has denied the allegations made by the U.S. Department of Defense. In a statement, the company called its inclusion on the list "a mistake" and said it would work with U.S. officials to resolve the issue. However, Hadean has decided to distance itself from Tencent to mitigate potential risks and maintain its business relationships with the Ministry of Defence and NATO.



Hadean's decision to cut ties with Tencent comes as the U.S.-China tech rivalry escalates, with both countries engaging in more provocative actions against each other. The Biden administration has restricted Chinese access to technology like semiconductor chips, while Beijing has added American companies to its sanction list. In this tense environment, Hadean has chosen to prioritize its business relationships with key defence organizations and seek new investors to replace Tencent.

In conclusion, Hadean's decision to cut ties with Tencent highlights the challenges and risks faced by companies with Chinese investments in the defence sector, particularly in the current geopolitical climate. As the U.S.-China rivalry intensifies, defence start-ups like Hadean must navigate the complex landscape of geopolitical tensions and potential regulatory hurdles to maintain their business relationships and growth prospects.
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