On April 29, 13 internet platform providers involved in finance services were summoned to a meeting with regulators in Beijing, the latest in a series of meetings aimed at tightening control over the country’s homegrown internet giants.
Tencent Holdings Ltd., the operator of WeChat, and Meituan, the on-demand delivery giant, are among the tech companies that offer financial services such as personal loans and insurance policies through their mobile apps.
After its representatives were summoned to a meeting with the regime’s regulators earlier this month, Ant Group, the financial wing of e-commerce giant Alibaba, confirmed that it would transform into a financial holding company overseen by China’s central bank.
The case of Ant’s group served as a cautionary note, but other financial platforms are still waiting to see what happens, according to state-run media Xinhua News.
According to a statement issued by four regulators, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, companies were told to proactively restructure their financial wings as holding companies subject to more rigorous supervision and obtain licenses before launching financial services.
Meanwhile, Reuters reported on April 29 that Tencent could face a $1.5 billion fine for its monopolistic practices and failure to properly report acquisitions and investments for antitrust reviews.
Another regulator, the State Administration for Market Regulation (SAMR), imposed a record $2.8 billion fine on Alibaba’s Ant Group on April 10, claiming anti-competitive behavior.
Meituan shares fell 3.6 percent and Tencent shares fell 1.8 percent in Hong Kong on Friday.
According to Lu Zhenning, a sociology scholar at Zhejiang University, the meeting indicates that the authorities have a systematic plan to rein in large private firms.
“It is entirely possible that [the regime] will convert them into state-owned enterprises as the next step.” The state will buy its shares and even become a controlling shareholder, “Lu warned.
The SAMR summoned 34 major internet companies to a meeting in Beijing on April 13 and gave them one month to correct monopolistic practices.