Tencent, the Chinese tech giant, is actively contesting its inclusion on the list of Chinese military companies by the US Department of Defense. The company views its designation as a mistake and is pursuing various avenues to have it removed. This action follows a significant drop in Tencent's stock value after the news was initially released.
Tencent's Response and Strategy
Tencent intends to initiate a "Reconsideration Process," engaging in discussions with the US Department of Defense to address any misunderstandings. If a resolution cannot be reached through negotiations, Tencent is prepared to pursue legal proceedings to remove itself from the "CMC List."
According to an official statement by the company:
- Tencent asserts it is not a Chinese military company nor a military-civil fusion contributor to the Chinese defense industry.
- The "CMC List" solely relates to US defense procurement and does not impact most of the company's operations.
- Inclusion on the CMC List does not prevent other parties (except the Department of Defense) from conducting business with Tencent.
Tencent's Global Presence
Tencent is well-known for its diverse online products and services, most notably the messaging apps Tencent QQ and WeChat in China. However, in Western markets, it's best recognized as the largest gaming publisher worldwide by revenue.
Tencent's game division includes a vast portfolio of owned and invested studios:
- Owned Studios: Riot Games, Funcom, Sharkmob, Sumo Group, Grinding Gear Games, Leyou (owner of Athlon Games, Splash Damage, and Digital Extremes)
- Majority Stakes: Turtle Rock Studios, Techland, Tequila Works, Klei Entertainment, Fulqrum Publishing, Wake Up Interactive, Inflexion Games, 10 Chambers Collective, Yager Development, Fatshark, Miniclip and Supercell.
- Minority Stakes: Don't Nod, Shift Up, Epic Games, Bloober Team, Marvelous, FromSoftware, Remedy, Krafton, Kakao, Paradox Interactive, Frontier Developments, and Ubisoft.
Recent rumors suggest that Tencent is also potentially interested in acquiring Ubisoft. Ubisoft recently appointed advisors to review sale options.
Tencent has reportedly shifted its M&A (mergers and acquisitions) strategy to focus primarily on majority deals.
