SHANGHAI—China’s months-long regulatory crackdown on an array of private companies has unsettled tech upstarts as well as decades-old firms, ushering in a new, uncertain environment.
Top antitrust regulator the State Administration for Market Regulation (SAMR) issued sweeping draft rules on Tuesday governing online competition as the cabinet updated rules for operators of information infrastructure that experts say target data-rich firms.
E-commerce
Traditional e-commerce has been one of the biggest targets with a record fine of $2.75 billion in April for Alibaba over its “choose one from two” feature that bars vendors from selling on rival sites.Smaller companies also faced fines over issues of consumer rights and labor.
In May, rival JD.com was fined 300,000 yuan ($46,000) over false information on food products.
In late July, the regulator ordered better protection for workers of food delivery firms.
Gaming and Social Media
Regulators have yet to directly target gaming and social media firms, but fierce criticism from state media over issues from celebrity watching to video game addiction have spurred big share sell-offs, or changes by the companies.Weibo Corp, which runs a Twitter-like service, dropped a ranking feature after the People’s Daily newspaper, backed by the Chinese Communist Party (CCP), criticized celebrity hype by social media this month.
In August, the Economic Information Daily described online gaming as “spiritual opium”, generating a storm that wiped $60 billion off the market value of industry giant Tencent Holdings at one point.
Education
Publicly listed tutoring firms saw massive sell-offs after regulations last month barred private, for-profit tutoring companies from raising capital overseas among other limits.Online Finance
In November, shortly before what would have been a record share sale by Ant Group Co Ltd, draft rules by banking regulators set tighter controls on online lending, where the company was a giant player.They also set limits on cross-provincial online loans and capped loans to individuals.
Ride-Hailing
In June, the Cyberspace Administration of China told top ride-hailing company Didi Chuxing to stop accepting new users, days after it was listed on the New York Stock Exchange, a measure that knocked about a fifth off its share price.Bitcoin
In May, three financial regulators widened curbs on cryptocurrency by barring its use for payment or settlement by banks and online firms, as well as exchanging it for fiat currencies and halting investments by fund managers.Property
In July, the housing ministry and seven regulators took aim at the property management sector with a notice that chipped more than a tenth off the CSI 300 Real Estate sub-index.What’s Next?
Investors are watching healthcare closely after the State Council, or cabinet, urged lower prices of medicines and reforms in June.Tech firms will also brace for a data security law that mandates risk assessments and reports to authorities, as well as a law to protect the personal information that governs the storage of user data.