China cracking down on companies is one of the biggest challenges for Chinese companies looking to list an IPO on US exchanges. It’s even been troubling some of the bigger Chinese companies such as Alibaba. In total, China’s move could meddle with over $2 trillion of equities traded by American investors. In fact, both retail and institutional investors would be affected, with Alibaba being among the five most owned stocks by hedge funds. According to the New York Stock Exchange, as of late April, about 60 Chinese companies were still planning to go public in the U.S. this year. China has once again upped its involvement with companies and regulating them.
Most recently, China has involved itself in the music industry, specifically with Tencent Music Entertainment Group (which is like a Chinese Spotify). China has ordered Tencent Music to give up exclusive rights to music labels which it has used to compete with smaller rivals. The goal of the crackdown is reminiscent of the US government’s attempted lawsuits with American tech giants for antitrust.
However, because of the political and non-democratic structure of China, the government will get what they order and in turn curb the economic and social power of once-loosely regulated internet giants. Some believe the actions of the government were good for the music industry because by pursuing exclusive streaming rights with labels including Universal Music Group, Sony Music Group, Tencent Music Entertainment Group was fending off competition. Now the company is forces to step up its game to retain customers. What do you think about the actions of the Chinese government? And do you think this was a good move?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.