Tencent Branded a Chinese Military Company by US Government

Pentagon List Includes Tencent, Causing Stock Dip; Company Disputes Designation

Tencent, a major Chinese technology conglomerate, has been added to the U.S. Department of Defense's (DOD) list of companies with ties to the Chinese military, specifically the People's Liberation Army (PLA). This inclusion stems from a 2020 executive order by former President Trump restricting U.S. investment in Chinese military entities. The order mandates divestment from these companies, which are believed to contribute to PLA modernization through technology, expertise, and research.

The DOD's updated list, released January 7th, prompted a swift denial from Tencent. A spokesperson issued a statement to Bloomberg asserting that Tencent is "not a military company or supplier," and that while the listing has no immediate impact on its operations, the company will engage with the DOD to clarify any misunderstandings.

This designation has had a noticeable effect on Tencent's stock price. A 6% drop on January 6th, and subsequent downward trends, are attributed by analysts to its inclusion on the DOD's list. Given Tencent's global prominence—it's the world's largest video game company by investment and a major player across various sectors—this listing and potential removal from U.S. investment portfolios could have significant financial repercussions.

Tencent's gaming division, Tencent Games, is a behemoth in the industry, boasting a market capitalization nearly four times that of Sony. Its portfolio includes stakes in numerous successful game studios, such as Epic Games, Riot Games, Techland (Dying Light), Dontnod Entertainment (Life is Strange), Remedy Entertainment, and FromSoftware. Furthermore, Tencent Games has invested in numerous other developers and related companies, including Discord. The company's efforts to resolve its designation with the DOD are anticipated to be similar to those of other companies who have successfully had their names removed from the list in previous years.