What China Expects from Businesses: Complete Surrender


When Pony Ma, chairman of Chinese internet giant Tencent, attended a group meeting with Premier Li Keqiang in 2014, he complained that many local governments had banned ridesharing apps installed on smartphones.

Mr. Li immediately told several ministers to investigate the matter and report back to him. He then turned to Mr. Ma and I said“For example, it vividly illustrates the need to improve the relationship between government and the market.”

By then, Tencent had invested $45 million in a ridesharing startup called Didi Chuxing, which later became a model in the government’s effort to digitize and modernize traditional industries. When President Xi Jinping meet Cheng Wei, the then 32-year-old founder of Didi, who was in Seattle with global technology leaders in 2015, joined Amazon’s Jeff Bezos, Apple’s Tim Cook and Mr.

But the relationship between Beijing and the tech sector has broken badly over the past year. Didi is now a target of the government’s regulatory wrath. Days after the company went public in New York last month, Chinese regulators pulled Applications from app stores on the grounds of protecting national data security and public interests.

Central to the Didi debacle, and largely to China’s increasingly aggressive antitrust campaign, is the question of what Beijing expects from private businesses. The answer is much more complex than in the United States or Europe.

China’s Big Tech uses that much too power as American tech giants in the national economy. Like their American counterparts, Chinese companies anticompetitive practices that harm consumers, merchants and small businesses. This deserves scrutiny and regulation to prevent abuse of power.

But it’s important to keep in mind that Chinese tech companies operate in an increasingly governed country. autocratic government demanding the surrender of the private sector with absolute fidelity. So unlike antitrust campaigns European and American officials are following China is using the mask of antitrust to strengthen the Communist Party’s monopoly of power in its regions. private businesses they are likely to lose what is left of their independence and become just an extension of the state.

Benjamin Qiu, partner at law firm Loeb & Loeb in Hong Kong, said the developments at Didi amounted to “a kind of shock therapy sanction.” “As a result, we may see more government control with de facto data expropriation.”

americans and Europeans Understandably, there shouldn’t be many who are frustrated by their regulators’ lack of progress in reining in Big Tech. impressed How quickly Beijing brought the tech giants to their knees. Like so many things in China, efficiency comes at the expense of law and due process.

The Communist Party did open last year, the private sector needs “politically sane people” who will “listen to and follow the party closely”. The party said they should contribute more to the longevity of the Communist Party and help make China great again.

People in the tech industry said the message was that businesses should prove helpful and helpful in advancing government goals while avoiding causing trouble.

Didi ignored the message, said these people. They were surprised that Didi went against the objections of some regulators and rushed its IPO in the current regulatory environment.

Didi’s US list for some government officials “yang feng yin wei” – to comply publicly, but to be challenged in private. The choice of words is self-explanatory, as this phrase is often used to describe the betrayal of a subordinate to a superior.

Li Chengdong, an internet consultant and investor, wrote about Didi in a social media post: “At a moment like this, internet companies that are ‘politically wrong’ will just face a stalemate.

It helps to know Beijing’s priorities for companies. At home, this is to reduce inequality and promote what the party calls “collective welfare.” He manages geopolitical tensions with the United States internationally.

As China’s economic growth slows and opportunities dwindle, the country’s rising inequality becomes a ticking time bomb in the eyes of any party that is paranoid about social unrest and skeptical of its legitimacy. And tech companies are increasingly being blamed for the wealth gap, while criticizing founders as bad guys who take advantage of consumers and force their employees to work long hours.

Beijing was dissatisfied last year when some big internet companies invest heavily in apps that sell vegetables to local residents. This is because the apps can replace the vegetable stalls, from which many low-income people make a living.

Beijing followed suit. Ant Group, the financial technology giant controlled by billionaire Jack Ma, in part because he believed Ant made it too easy for young people to get personal loans, causing social discontent.

The government has also cracked down on the online education industry, which officials believe is profiting from playing with parents’ concerns. This put Beijing’s future in jeopardy by increasing the cost of raising children. new policy encouraging couples to have more than one child.

In April, a government official spent 12 hours as a food delivery worker, earning only about $6. This has sparked widespread debate about how badly online platforms treat their employees.

A Beijing-based venture capitalist said Tencent, Didi and e-commerce giant Alibaba, known as “platform” companies, are now second-class citizens in the eyes of the government. (Top-notch companies are developing “real” technologies like semiconductors and artificial intelligence that can help China become more technologically confident, he said.) Platforms have too many users, too much data, too much capital, and too much power for the government. , said.

In the past six months, tech giants and some star entrepreneurs have pledged their loyalty and made gestures of money and resignations. Tencent announced in April that it will spend $7.8 billion on green energy, education and village revitalization.

In April, four days after Mr. Xi visited Tsinghua University in Beijing, where he graduated, Wang Xing, the founder of the food delivery company Meituan and also a Tsinghua graduate, set up a foundation at the university. In June, Mr. Wang donated more than $2 billion worth of shares to his own foundation.

After two employees died Colin Huang, founder of e-commerce platform Pinduoduo, said he will step down in March to make room for future generations. He is 41 years old and has just been named the second richest person in China.

In May, 38-year-old Zhang Yiming, the founder of TikTok’s parent company ByteDance, announced that he would also step down as CEO. A month later he open $77 million donation to establish an education foundation in his hometown. Wall Street Journal It also reported that ByteDance shelved its IPO plans in March, after consulting with regulators.

One business unit of Tencent said last month that its employees must now leave the office by 6 PM on Wednesdays and 9 PM on other weekdays. ByteDance announced this month that it will remove the requirement to work on Saturdays every two weeks, which is common practice at many Chinese companies.

Similar announcements kept coming after the Didi edition. JD.com, an e-commerce platform, said on Tuesday that it will increase the average annual salary of its employees from 14 months to 16 months. On Friday, Lei Jun, founder of smartphone maker Xiaomi, donated more than $2 billion in shares to the two foundations.

What do all these actions have to do with antitrust and reining in Big Tech’s power? Not quite directly. But companies and entrepreneurs are actively telling the government that they know who the master is and that they should at least do something that seems to reduce social inequality and discontent.

The other “sin” Didi committed was going public in New York at a time when geopolitical tensions between China and the United States were intensifying and the two countries were fighting for technological supremacy.

There is a growing concern in China that many tech companies backed by Western venture capital firms and traded in New York could become economic pawns if bilateral relations deteriorate. China announced would require domestic tech companies to submit to a cybersecurity check before listing their shares abroad, which would likely thwart most IPO plans.

“China needs to prepare for the worst-case scenario,” Weibo user Xiong Weizhou commented on his verified Weibo account. “There could be a war with Taiwan or sanctions by the US and Europe. Major Chinese companies should not become the soft underbelly of the country.”


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