In this global economic landscape, companies from other countries regularly invest in companies in other countries. Tencent is a prime example of that. The company has major investments in the US, but things could get a bit difficult. This is because the US government has added Tencent to a list of companies they deem to be “Chinese military” companies.
Tencent denies the allegations
Tencent isn’t alone in this situation. In addition to Tencent, the US Department of Defense has also added other Chinese companies to the list. This includes CATL, who at the moment is a major supplier of electric car batteries to Tesla. Unsurprisingly, both companies have denied claims that they are “Chinese military” companies.
In a statement to TechCrunch, Tencent said the listing is “clearly a mistake” and that “we are not a military company or supplier.” The notice posted by the US Department of Defense does not specify why they think Tencent could be helping the Chinese military.
Chinese military company
What does it mean if a company is deemed a “Chinese military” company? For now, it isn’t as severe as being placed on the US Entity List, where Huawei currently sits. This forbids US companies from doing business with companies placed on the list. It also prevents these listed companies from using tech that originates from US firms and patents.
This is why Huawei had to ultimately ditch Android in favor of its own mobile operating system. It is also why Huawei has fallen behind considerably in the chipset race.
Designing Tencent as a “Chinese military” company means that US government contractors cannot do business with it starting in 2026. It also warns US companies that their partners are involved in Chinese “military-civil fusion” efforts. This could also lead to pressure the US Treasury Department to sanction these companies.
Implications
It is unclear what will happen to Tencent moving forward. As mentioned previously, the listing only bans US government contractors from doing business with them. However, Tencent has become quite involved in the US market through its investments in several US companies.
This includes companies like Reddit, Snap, and Epic Games. Tencent also acquired Riot Games back in 2011. Riot Games is behind the popular MOBA title League of Legends. It is still the most popular MOBA title with over 100 million active players. This listing could force Tencent to scale back on its investments, which in turn could have a negative impact on these US companies that rely on their funding.
