#msg-165186889 Chinese internet stocks BABA JD PDD TCEHY VIPS BIDU TME NTES TCOM BILI YY BEKE DADA DIDI
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China will ban its internet platforms from a wide array of behaviour deemed to harm market competition, as Beijing’s crackdown on the sector intensifies.
The State Administration for Market Regulation, China’s antitrust watchdog, released draft rules on Tuesday that banned unfair competition among internet companies and could come into force this year.
Shares in Chinese internet and ecommerce groups JD.com, Alibaba and Tencent closed down 5.2 per cent, 4.8 per cent and 4.1 per cent respectively in Hong Kong trading.
China’s market regulator has demanded “self-rectification” from dozens of internet companies, including ride-hailing platform Didi Chuxing, which has become a particular target of scrutiny following its $4.4bn initial public offering in New York in June.
The SAMR also fined Alibaba, the ecommerce group, a record $2.8bn in April for abusing its market dominance.
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The crackdown has shaved billions of dollars worth of market value from China’s leading tech companies.
Angela Zhang, an expert on Chinese antitrust legislation at the University of Hong Kong, said the measures would target practices such as false advertising, fraudulent online reviews, unfair competition, interoperability issues, data protection and consumer privacy issues.
Li Chengdong, founder of Dolphin, a technology-focused think-tank in Beijing, said SAMR’s rules would crack down on major platforms “using monopoly status to suppress small and medium businesses”.
The announcement marked an expansion of the rectification campaign to the entire sector, he said, while Alibaba and Meituan, China’s biggest food delivery platforms, were “still the ones with more severe problems”.
The Chinese Communist party has made antitrust regulation central to a broad campaign to limit behaviour by internet groups that it considers damaging to social stability and national security.
Analysts said the campaign had been driven in part by user anger over perceived exploitation by powerful internet companies.
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Merchants as well as the platforms themselves can also be fined for practices such as false transactions, rankings or user reviews, all of which are common in China.
The measures included detailed descriptions of the metrics that will determine whether a company is stifling competition, as well as an option to bring in third-party expertise for complicated cases. Individuals and companies have also been encouraged to report instances of unfair competition to SAMR.
“It’s a very long list of behaviours, many of which are rampant,” Schaefer said. “Regulatory displeasure with some of these things has been signalled in the past year, but this is the ultimate collection.”
Alibaba (BABA), Yum China Holdings (YUMC), ACM Research (ACMR), Baidu (BIDU), and Pinduoduo (PDD) were among the Chinese stocks that got hammered in U.S. trading Thursday after the U.S. Securities and Exchange Commission put forward a list of five companies that could be delisted if they don’t measure up to U.S. accounting standards. The list was a first step in applying the Holding Foreign Companies Accountable Act, which became law on Dec. 18, 2020. The act requires foreign companies to make documents available for accounting purposes and delist them if they can’t meet the requirements. The preliminary list of five companies includes BeiGene (BGNE), Zai Lab (ZLAB), Hutchmed (China) (HCM), Yum China, and ACM. Not surprisingly, BeiGene declined 5.9%, Hutchmed fell 6.5%, Zai Lab dropped 9%, Yum China slumped 11%, and ACM tumbled 22%. But Chinese ADRs that weren’t named also fell, including Alibaba, which dropped 7.9%, Baidu, which declined 6.3%, Nio (NIO), which slumped 12%, and Pinduoduo, which tumbled 17%.
Chinese stock crushes after Chinese President Xi Jinping secured an unprecedented third term as leader of the People's Republic on Sunday -- and U.S.-listed Chinese tech stocks promptly fell off a cliff as a result.
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