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Earlier this week the US Department of Defense added a new batch of companies to its Chinese military companies blacklist. While inclusion on the list comes with no sanctions, it does have a reputational impact, and is designed to put off US investors. Tencent called the designation a “misunderstanding”, and has since provided a full statement, noting its plans to “initiate a Reconsideration Process to correct this mistake”.
Companies on the list are suspected of being controlled by the People’s Liberation Army or providing it with support, but Tencent continues to refute this. “As the Company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake,” the statement provided to PC Gamer, and posted on Tencent’s website, reads.
While the list’s origins stem from an executive order issued by Trump during his first term, which did result in US companies being blocked from investing in some Chinese companies, this specific list does not restrict anyone from doing business with Tencent outside of the DoD.
“Unlike other lists maintained by the US Government for sanctions or export control measures, inclusion in the CMC List relates only to US defense procurement, which does not affect the business of the Group,” the statement notes. “The CMC List is also distinct from the Non-SDN Chinese Military-Industrial Complex List (NS-CMIC List) maintained by the US Office of Foreign Assets Control, and inclusion in the CMC List will not prohibit any persons (other than the Department of Defense) from business dealings with the Company, including transacting in the securities of the Company.”
After Tencent was added to the list, its stock fell by 7% in Hong Kong, however, so it has a demonstrable negative impact, thus Tencent wants its inclusion to be reconsidered, and it’s willing to begin legal proceedings if the “mistake” is not corrected through the reconsideration process.
“During the process,” Tencent says, “it will engage in discussions with the U.S. Department of Defense to resolve any misunderstanding, and if necessary, will undertake legal proceedings to remove the Company from the CMC List.”
Other Chinese companies have successfully negotiated their removal from the list, including XIaomo Corporation, an electronics company best known for manufacturing smartphones, which was taken off the list in 2021.
As one of the largest companies in the world, and the biggest videogame publisher, Tencent does a great deal of business with both the US and globally. It owns Riot Games, Funcom and Grinding Gear Games, which just released Path of Exile 2 in early access in December. It also has stakes in Epic, Larian, FromSoftware, Paradox, Frontier, Roblox Corporation, Ubisoft—basically, if you’re playing a game, there’s a good chance Tencent has some involvement.
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Kurt Indovina
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