Tencent has been added to a blacklist of companies suspected of having ties to the Chinese military, causing its stock price to fall by more than 7%, and the company's reputation may be damaged and it may be exposed to pressure from the Treasury Department for sanctions.
On January 6, 2025, the US Department of Defense announced that it had added
Notice of Availability of Designation of Chinese Military Companies
(PDF file) https://public-inspection.federalregister.gov/2025-00070.pdf
US adds Tencent, CATL to list of Chinese allegedly aiding Beijing's military firms | Reuters
https://www.reuters.com/world/us-adds-tencent-catl-list-chinese-firms-allegedly-aiding-beijings-military-2025-01-06/
US designates Tencent and CATL as Chinese military companies - The Verge
The US just added Tencent — which backs US startups — to its list of 'Chinese military' companies | TechCrunch
https://techcrunch.com/2025/01/06/the-us-just-added-tencent-to-its-list-of-chinese-military-companies/
Chinese internet giant Tencent is the parent company of Riot Games, a gaming company known for popular games such as VALORANT and League of Legends, and has investments in many companies, including Epic Games, Larian Studios, Ubisoft, and From Software. Tencent has also been reported to be in talks to acquire Ubisoft.
Ubisoft reportedly considering selling itself to China's Tencent, shares soar by more than 30% - GIGAZINE
By Tim Bartel
The US Department of Defense has been adding companies suspected of having ties to the People's Liberation Army of China to the ' Section 1260H ' list since 2021, and the list of companies is updated annually. On January 6, 2025, the US Department of Defense added Tencent to Section 1260H.
According to Reuters, the addition of Section 1260H will not immediately prevent transactions within the United States. However, it may warn American entities and companies about the risks of doing business with the company, and it may have a negative impact on the reputation of the company. It has also been pointed out that pressure may be put on the US Treasury Department to impose sanctions on the company.
Due to these concerns, Tencent's stock price on the Hong Kong stock market fell by more than 7% at one point on January 6, 2025. In addition, it was reported that the American Depositary Receipts (ADRs) fell sharply by 9.8% at one point.
'We are not a military company or supplier, so the inclusion in Section 1260H is incorrect,' Tencent said. 'Unlike sanctions or export controls, this listing will not affect our business. Nevertheless, we will continue to work with the Department of Defense to address this misunderstanding.'
In addition, the Department of Defense has also added Chinese electric vehicle battery manufacturer CATL and drone manufacturer Autel Robotics to Section 1260H. CATL spokesman Fred Zhang said, 'CATL is not involved in military-related activities by the People's Liberation Army of China. We will continue to ask the Department of Defense to reconsider the designation.'
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