US Govt. Labels Tencent as Chinese Military Company

Pentagon List Includes Tencent, Causing Stock Dip; Company Disputes Designation

Tencent, a prominent Chinese tech giant, has been added to the U.S. Department of Defense's (DOD) list of companies with ties to the Chinese military, specifically the People's Liberation Army (PLA). This listing stems from a 2020 executive order by former President Trump restricting U.S. investment in Chinese military entities. The order mandates divestment from these companies, which are believed to contribute to PLA modernization through technology, expertise, and research.

The DOD's updated list, released January 7th, included Tencent. The company swiftly responded via a spokesperson, stating to Bloomberg that it is "not a military company or supplier" and that the listing has no operational impact. However, Tencent intends to collaborate with the DOD to clarify any misunderstandings.

This designation has had a noticeable impact on Tencent's stock price. Shares experienced a 6% drop on January 6th, with analysts linking this decline to the DOD listing. Given Tencent's substantial global influence—it's the world's largest video game company by investment and a major player overall—this inclusion and potential removal from U.S. investment portfolios carries significant financial consequences.

Tencent's gaming operations are primarily managed through Tencent Games, its publishing arm. Beyond publishing, Tencent holds ownership stakes in numerous successful game studios, including Epic Games, Riot Games, Techland (Dying Light), Don't Nod (Life is Strange), Remedy Entertainment, and FromSoftware. It has also invested in numerous other developers and related companies, such as Discord. This extensive portfolio underscores Tencent's considerable influence within the global gaming industry, dwarfing competitors like Sony with a market capitalization nearly four times larger.