Baidu, Tencent, and Alibaba – China’s “Big 3” are sinking. Prominent entrepreneurs are keeping a low profile and investors are fearing growth days are over. Jack Ma stayed so dormant that rumors of the Chinese government conspiring against him started circulating. Once its darling, China’s tech industry is now in a sorry state.
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This penchant for self-harm is a product of the intensive regulatory crackdown that the government has recently established. Under Jinping’s administration, the new regulatory policy is choking off China’s once thriving tech sector.
In 2021, the country’s powerful regulators rooted out “illegal” crypto mining, trading, and major cryptocurrency activity. The reasons were also mixed. While some regulators played the environmental card and said their actions were purely to stop the energy-intensive computing process, others pointed out the highly volatile market of the digital currencies. The move led to a huge downfall of the overall value of crypto in the international market.
Next, the education sector was targeted. China completely overthrew the online tutoring sector, citing that it was causing an unnecessary burden on the overall population. A sudden wipeout affected the billion dollar industry and almost a million people lost their jobs.
In the entertainment industry, censorship has become a major concern. Many mega projects are being scrapped over concerns of increasingly harsh and unpredictable censorship. “Restrict this, cancel that. Regulate this, censor that. This country will become a cultural desert eventually,” remarked Chen Jian, a stock market investor.
A similar crackdown can now be seen in the entire tech industry of the nation.
China’s tech industry is at the suffering’s end. First, it was the lockdowns because of COVID and trade sanctions from the west. Now, it is the compounded challenges of the regulatory crackdown. Ruling Communist Party of China (CPC) abruptly ordered a regulatory campaign that wiped out many businesses on the pretext of security, standard, and power abuse.
Now, let’s look at some fines that were slapped on some of the major business houses of this Asian country:
- Alibab was fined $2.8 billion for antitrust violations on September
- Meituan, a food delivery company, was fined $530 million
- Weibo was fined 44 times in 2021
- Douban, a popular movie and book reviewing site, was fined 20 times in 2021
Several companies are announcing job layoffs. iQiyi, China’s biggest video platform, laid off 20 percent of its staff in 2021. Layoffs trended so much that CCA (China Cyberspace Administration) had to publicly comment on the hiring trends of companies like Tencent, Baidu, and Alibaba.
When you are so big that nobody can defeat you, you become the cause of your own destruction. Let us know what you think of this.
