BEIJING, CHINA – MARCH 3: Pony Ma Huateng, Chairman and CEO of Tencent Holdings Ltd., speaks at a 2016 press conference in Beijing.
Zhang Lintao/Getty Images
Chinese internet giant Tencent was added to the U.S. government's list of military-related companies, spooking investors and causing its Hong Kong-listed shares to plunge as much as 7%.
Other companies were also added to the list, including battery maker Contemporary Amperex Technology Co. Ltd. (CATL), whose Shanghai-listed shares fell 3% on Tuesday morning.
Every year, the Pentagon releases a list of “Chinese military companies” it says operate directly or indirectly in the United States. Triggering specific sanctions from the Pentagon, but what it does is that the blacklisting could hurt those companies' international operations as potential partners assess new risks.
“Being included in the blacklist may affect investment or factory construction in the United States,” said Shen Meng, Beijing-based managing director of WeChat boutique investment bank Chanson & Co. “Companies that work with blacklisted companies may be barred from participating in federal projects or investing in industries critical to the U.S. government.”
A spokesman for Tencent said its inclusion on the Pentagon's list was “obviously a mistake.”
“We are not a military company or supplier,” a spokesperson said in a statement to Forbes. “Unlike sanctions or export controls, this listing has no impact on our business. Nonetheless, we will work with the Department of Defense to resolve any misunderstandings.
CATL did not respond to an emailed request for comment. The company earlier told Bloomberg that being included on the list was a “mistake.”
Tencent, co-founded by billionaire Ma Huateng, China's third-richest man with a net worth of $42.5 billion, has been aggressively expanding overseas to diversify its revenue streams. As one of the world's largest video game publishers, the online giant has invested in American game company Epic Games and electric car manufacturer Tesla. Tencent also owns the popular WeChat messaging app and has stakes in international companies including Swedish music streaming service Spotify and Finnish game developer Supercell.
CATL, whose founder Robin Zeng has a fortune of $35.9 billion, has announced plans to invest billions of dollars in building factories in the United States. The company has been working with Ford since 2023, according to Forbes estimates. Battery factory built in Michigan. The company initially planned to invest $3.5 billion, but that amount has been scaled back due to rising political tensions. CATL is also a major battery supplier to electric vehicle manufacturers such as Tesla.
Companies on the Pentagon's list can try to get off the list. In 2021, U.S. officials agreed to remove Chinese smartphone maker Xiaomi from shelves after it sued the U.S. government. But other companies that have sued the Pentagon — including drone maker DJI and laser sensor developer Hesai Technology — remain on this year’s list.
It also includes security software maker 360 Security Technology, smartphone and telecommunications giant Huawei and Shenzhen-listed gene sequencing company BGI.
