June 29, 2022

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China’s Tech Giants Lost Their Swagger and May Never Get It Back

2 min read

(Bloomberg) — On trading floors in New York and Hong Kong, the brightening mood toward Chinese technology companies is unmistakable: With stocks like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. surging from multi-year lows, talk of a new bull market is growing louder.

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Yet speak to executives, entrepreneurs and venture capital investors intimately involved in China’s tech sector and a more downbeat picture emerges. Interviews with more than a dozen industry players suggest the outlook is still far from rosy, despite signs that the Communist Party’s crackdown on big tech is softening at the edges.

These insiders describe an ongoing sense of paranoia and paralysis, along with an unsettling realization that the sky-high growth rates of the past two decades are likely never coming back.

Alibaba and Tencent are expected to deliver single-digit revenue growth in 2022, a letdown after years of rip-roaring expansion. One prominent startup founder said he’d pass on money from those companies because of the attention it would attract. Another said his company is proceeding on the assumption that it’s only a matter of time before officials double down again.

A third Beijing-based entrepreneur recently sold his stake in a tech unicorn and said he’s reluctant to start a new venture until there’s more clarity on what the government will allow.

“China’s tech crackdown has happened. There is no comeback from that,” the entrepreneur said, asking to remain anonymous for fear of retribution. “The regulatory pressure on Chinese tech companies may have hit the brakes for now, given the sluggish economy, but it’s unthinkable that regulators in the country would loosen their grip on platform companies ever again.”

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On the face of it, China’s $1 trillion internet industry is finally emerging from a brutal reckoning. Jack Ma’s embattled Ant Group…



2022-06-23 22:44:44

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