Tencent Stock Plunges After U.S. Designates It as Chinese Military Company
AInvestMonday, Jan 6, 2025 9:10 pm ET
7min read
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Shares of Tencent Holdings (OTC:TCEHY) Limited (HKEX:0700) fell 6.4% on Monday after the company, along with several others including Contemporary Amperex Technology Co., Ltd. and Autel Robotics Co., Ltd., was designated as a "Chinese military company operating in the United States" by the US Defense Department. This announcement was made in a Federal Register filing by the Office of the Under Secretary of Defense (Acquisition and Sustainment), Department of Defense.

The Deputy Secretary of Defense has determined that these entities qualify as "Chinese military companies" under the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. This determination requires the Secretary of Defense to identify and publish a list of such companies annually until December 31, 2030. The intent behind the designation is to highlight companies that are believed to be affiliated with or supportive of the Chinese military.

The listing in the Federal Register does not provide specific details on the implications of this designation for Tencent or the other companies mentioned. However, historically, companies identified under this category have faced increased scrutiny and potential restrictions from the US government, which can affect their business operations and investor sentiment.

Tencent's stock fell in US trading on Monday after the Defense Department designated the technology firm a Chinese military company operating in the US. As of 1:36 p.m. ET, Tencent shares were down 9.7% for the session.



The US Department of Defense has classified Tencent, a major investor in several big video game companies, as a Chinese military company. The report from Bloomberg states that Tencent alongside battery maker CATL have been added to a list that classifies them as Chinese military companies. The designation itself does not carry any legal consequences such as sanctions, but inclusion on the list is not ideal for companies looking to conduct business in the United States.

As a result, while there is no immediate impact to what this designation means for Tencent, this is still a company that owns Riot Games, and has heavy investments in a variety of other game companies including Epic Games, Larian Studios, and FromSoftware. There are also reports that say Tencent is in negotiations with investing more into companies like Ubisoft.

Tencent has told Bloomberg that this designation is "clearly a mistake" and both Tencent and CATL will be pushing to remove their names from the Department of Defense's list. Previously, Chinese phone manufacturer Xiaomi was added to the same list in 2021 and then removed from it a few months later.



In a statement to The Verge, Tencent's Danny Marti says that the designation "has no impact on our business" but will still be working to remove themselves from the classification. In a one pager published by the Department of Defense, the US government cites Military Civil Fusion, or MCF, a strategy it says the Chinese government uses to combine civilian research and commercial success to further advance its military, hence why the US government has a list of Chinese companies it suspects as working with the Chinese military, something companies like Tencent and Xiaomi deny.

The US Department of Defense has classified Tencent, a major investor in several big video game companies, as a Chinese military company. The report from Bloomberg states that Tencent alongside battery maker CATL have been added to a list that classifies them as Chinese military companies. The designation itself does not carry any legal consequences such as sanctions, but inclusion on the list is not ideal for companies looking to conduct business in the United States.

As a result, while there is no immediate impact to what this designation means for Tencent, this is still a company that owns Riot Games, and has heavy investments in a variety of other game companies including Epic Games, Larian Studios, and FromSoftware. There are also reports that say Tencent is in negotiations with investing more into companies like Ubisoft.

Tencent has told Bloomberg that this designation is "clearly a mistake" and both Tencent and CATL will be pushing to remove their names from the Department of Defense's list. Previously, Chinese phone manufacturer Xiaomi was added to the same list in 2021 and then removed from it a few months later.



In a statement to The Verge, Tencent's Danny Marti says that the designation "has no impact on our business" but will still be working to remove themselves from the classification. In a one pager published by the Department of Defense, the US government cites Military Civil Fusion, or MCF, a strategy it says the Chinese government uses to combine civilian research and commercial success to further advance its military, hence why the US government has a list of Chinese companies it suspects as working with the Chinese military, something companies like Tencent and Xiaomi deny.

The US Department of Defense has classified Tencent, a major investor in several big video game companies, as a Chinese military company. The report from Bloomberg states that Tencent alongside battery maker CATL have been added to a list that classifies them as Chinese military companies. The designation itself does not carry any legal consequences such as sanctions, but inclusion on the list is not ideal for companies looking to conduct business in the United States.

As a result, while there is no immediate impact to what this designation means for Tencent, this is still a company that owns Riot Games, and has heavy investments in a variety of other game companies including Epic Games, Larian Studios, and FromSoftware. There are also reports that say Tencent is in negotiations with investing more into companies like Ubisoft.

Tencent has told Bloomberg that this designation is "clearly a mistake" and both Tencent and CATL will be pushing to remove their names from the Department of Defense's list. Previously, Chinese phone manufacturer Xiaomi was added to the same list in 2021 and then removed from it a few months later.



In a statement to The Verge, Tencent's Danny Marti says that the designation "has no impact on our business" but will still be working to remove themselves from the classification. In a one pager published by the Department of Defense, the US government cites Military Civil Fusion, or MCF, a strategy it says the Chinese government uses to combine civilian research and commercial success to further advance its military, hence why the US government has a list of Chinese companies it suspects as working with the Chinese military, something companies like Tencent and Xiaomi deny.

The US Department of Defense has classified Tencent, a major investor in several big video game companies, as a Chinese military company. The report from Bloomberg states that Tencent alongside battery maker CATL have been added to a list that classifies them as Chinese military companies. The designation itself does not carry any legal consequences such as sanctions, but inclusion on the list is not ideal for companies looking to conduct business in the United States.

As a result, while there is no immediate impact to what this designation means for Tencent, this is still a company that owns Riot Games, and has heavy investments in a variety of other game companies including Epic Games, Larian Studios, and FromSoftware. There are also reports that say Tencent is in negotiations with investing more into companies like Ubisoft.

Tencent has told Bloomberg that this designation is "clearly a mistake" and both Tencent and CATL will be pushing to remove their names from the Department of Defense's list. Previously, Chinese phone manufacturer Xiaomi was added to the same list in 2021 and then removed from it a few months later.



In a statement to The Verge, Tencent's Danny Marti says that the designation "has no impact on our business" but will still be working to remove themselves from the classification. In a one pager published by the Department of Defense, the US government cites Military Civil Fusion, or MCF, a strategy it says the Chinese government uses to combine civilian research and commercial success to further advance its military, hence why the US government has a list of Chinese companies it suspects as working with the Chinese military, something companies like Tencent and Xiaomi deny.

The US Department of Defense has classified Tencent, a major investor in several big video game companies, as a Chinese military company. The report from Bloomberg states that Tencent alongside battery maker CATL have been added to a list that classifies them as Chinese military companies. The designation itself does not carry any legal consequences such as sanctions, but inclusion on the list is not ideal for companies looking to conduct business in the United States.

As a result, while there is no immediate impact to what this designation means for Tencent, this is still a company that owns Riot Games, and has heavy investments in a variety of other game companies including Epic Games, Larian Studios, and FromSoftware. There are also reports that say Tencent is in negotiations with investing more into companies like Ubisoft.

Tencent has told Bloomberg that this designation is "clearly a mistake" and both Tencent and CATL will be pushing to remove their names from the Department of Defense's list. Previously, Chinese phone manufacturer Xiaomi was added to the same list in 2021 and then
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