Chinese authority denies report on investing and fundraising rules for tech firms

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The Chinese authority has denied releasing a document containing guidelines for Chinese tech companies, after a report said that the Chinese government had drafted new rules that govern investment or fundraising plans of internet companies with more than 100 million users or ¥10 billion (US$1.58 billion) in revenue. The Cyberspace Administration of China (CAC) said on its website that it noticed there was a report about CAC rolling out guidelines to regulate investment or fundraising plans of internet companies. However, after consulting the person in charge, CAC said it did not issue this document and the information was false.

A Reuters report said it was not clear whether the denial was just about the existence of the document or plans for further regulation. On 19 January, Reuters cited people familiar with the matter that the Chinese authority had drafted new rules to strengthen its oversight of investment or fundraising plans of any tech company boasting more than 100 million users, or with more than ¥10 billion (US$1.58 billion) in revenue. The report also added that some Iinternet companies have already been briefed on the plans, although the draft rules could be revised.

Earlier this month, several Chinese tech companies were fined for violating China's anti-monopoly law including Tencent, Alibaba and Bilibili.

China's State Administration for Market Regulation (SAMR) said on its website that it had imposed nine fines on Tencent. The penalty was equivalent to ¥4.5 million. According to state media Global Times, most of the fines involved Tencent's acquisition of smaller companies, according to filings published on the tech company's website. For example, the SAMR imposed a ¥500,000 fine on the company for its failure at reporting its acquisition of an online wine retailing company based in Guangxi. Additionally, it was also fined another ¥500,000 for not reporting its acquisition of a Beijing-based delivery company from anti-monopoly regulators.

Bilibili was also handed a ¥500,000 fine for not reporting the acquisition of mobile picture editing software company Versa to the authority. The same report from Global Times said Bilibili signed a contract with Versa in early 2020 to hold a 14.71% stake in the firm. Subsidiary of Alibaba Group Alibaba (China) Network Technology received a fine of ¥500,000 for failing to report its acquisition of supermarket company Xingli too.

In a separate incident, TikTok’s parent company ByteDance has disbanded its investment department, according to a report from CNBC. The report said after an assessment at the beginning of 2022, ByteDance decided to strengthen its focus of the business and reduce investments with little connection to the main business. Employees from the strategic investment department will be transferred to various lines of business.

The company said the decision was aimed at strengthening the coordination between strategic research and the business.

Last year, ByteDance founder Zhang Yiming stepped down as chairman of the company. However, he was said to be staying on with the company to help formulate the company's longer-term strategy.