Fretting about unprecedented regulatory heat for China's tech sector, some companies are no longer waiting for any official reprimands that may or may not be forthcoming.
Instead, eager to pre-empt authorities, they've decided to
'self-correct', imposing restrictions on or even walking away from their own
businesses.
KE Holdings (BEKE.N), China's largest platform matching
buyers and sellers of real estate, is one such example.
This year it quietly shut down its VIP services that
promised fast-turnarounds for property sellers in exchange for exclusive
listings and which had featured prominently on its popular Lianjia and Beike
apps, two people familiar with the matter said.
The decision to pull the plug on the VIP services was not
prompted by a regulatory request but KE, which is currently the subject of an
antitrust probe, had wanted to move "proactively" and
"voluntarily", said the people who declined to be identified as KE has
not publicised its actions.
"It wasn't a big business but it had the potential to
become one," said one of the sources.
KE said in a statement to Reuters that any business
adjustments on its part "were in compliance with government regulations
and aimed at providing better services."
So-called 'self-correction' is promising to become a major
corporate trend as the government tears into regulatory norms to promote
socialist values and rein in what critics have called reckless capitalist
expansion. The term is increasingly used by state media and is similar in tone
to 'self-criticism' - a practice encouraged by China's Communist Party.
THE NEW NORMAL
One of the most high-profile examples has been Tencent
Holdings Ltd's (0700.HK) decision this month to introduce new limits on kids'
time spent on "Honor of Kings", its most popular video game. That
came just hours after its shares were battered by a state media article which
described online games as "spiritual opium".
"Everyone is trying to get a clear read on the new
normal and is resetting as fast as possible," said Jeffery Towson, host of
the Asia Tech Strategy podcast and former professor of investment at Peking
University.
"Nobody is doing 'move fast and break things' anymore.
Nobody is using their market power too aggressively. Everyone is aligning their
strategies more closely with the government's priorities," he said.
While Chinese regulators have clamped down on a range of
sectors from property to cryptocurrencies to private tutoring, the tech sector
has come in for some of the harshest measures to date.
Ant Group's mega listing was scuppered at the eleventh hour
last year, while regulators in July ordered newly listed ride-hailing giant
Didi Global Inc (DIDI.N) to take down its app from app stores in China.
A slew of antitrust probes have also been launched, fines
imposed, including a record $2.75 billion antitrust penalty for Alibaba Group
Holding (9988.HK), while new guidance and regulations have been introduced or
are in the works.
Other 'self-correcting' companies include NetEase Music
which announced last month it would not enter into exclusive contracts, a move
that came after Tencent was barred by China's market regulator from entering
into exclusive music copyright agreements. read more
Twitter-like Weibo (WB.O) also pulled an online list that
ranks celebrities by popularity after a state media report critical of
celebrity culture.
"The brutal growth, disorder and greed of Chinese tech
companies have caused a series of problems," said Xie Pu, founder of
Chinese tech website Techie Crab.
"This kind of 'self-correction' will bring a relatively
healthy competitive environment." -Reuters
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