In a meeting organized jointly by Chinese Cyberspace and tax authorities, the regulators warned 34 big technology companies that it would be tightening scrutiny and advised them to follow the country’s regulations and rectify their anti-competitive practices within a month. The companies include big names such as Tencent, JD.com and Meituan. The regulators ordered the tech companies to carry out internal audits to ensure compliance with rules while warning them against resorting to tactics such as acquisitions to roll over competition or against burning cash to increase their market share in community group buying. The companies are also expected to address issues such as tax evasion and data leaks. After the internal audits by the companies, the regulators would be conducting follow-up inspections with an aim to crackdown on the defaulters, especially those that resort to activities such as forced exclusivity, a practice that “flagrantly trampled and destroyed” market order. The meeting comes within a few days of a fine of $2.8bn imposed on e-commerce giant Alibaba for abusing its position of market dominance. As China increases scrutiny over tech companies, the watchdog remarked that “The baseline of policies cannot be crossed, the red line of laws cannot be touched”. Fred Hu, chairman of private equity firm Primavera Group, referring to the fine imposed on Alibaba said, “Other tech companies would be wise to assume they may be receiving the same level of scrutiny and penalty”.
While Alibaba’s shares have gained 7% since the start of the week, the shares of other tech companies including Tencent, Meituan and JD trended lower. The bonds on the other hand were trading in green. Tencent’s 3.24% 2050s and 3.29% 2060s were up 0.84 and 0.82 to trade at 93.33 and 93.74. JD.com’s 4.125% 2050s were up 0.99 to trade at 103.32. Meituan’s 3.05% 2030s were up 0.57 to trade at 95.57. Alibaba’s 4.4% 2057s and 3.25% 2061s were up 1.02 and 0.78 to trade at 116.03 and 94.34 respectively.
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