London: China is to take “golden shares” in two of its biggest tech companies, Alibaba and Tencent, as Beijing extends its influence on the country’s star tech firms and its most powerful and wealthy business people, media reports said.
Beijing’s move marks a shift away from imposing hefty fines and sanctions in its two-year tech crackdown, which was launched after Alibaba founder Jack Ma criticised regulators.
The crackdown has proved tumultuous for Chinese tech firms, with billions wiped off their value, and moves including blocking the flotation of Ma’s financial services firm, Ant Group, which would have been the world’s biggest IPO, The Guardian reported.
Earlier this week the fintech company announced that Ma, once China’s richest man but now living in self-imposed exile in Japan, would cede control of the company.
However, the government’s approach has weakened foreign investment and the competitiveness of the Chinese tech market, resulting in a softening and change of tactical approach to keeping its big tech in check.
Beijing recently took a small equity stake in the Twitter-like Weibo and in ByteDance, the privately-owned parent of TikTok, which is known as Douyin in China, as a means for the state to become more directly involved in business operations.
The move to take stakes in the local operations of Alibaba and Tencent, which usually amount to about 1 per cent, have been dubbed “golden shares” as they come with special rights over business decisions.
Within China, the stakes are known as “special management shares” and have been used since 2015 by the state to exert influence, The Guardian reported.