Tencent Branded a Chinese Military Company by US Government

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

Tencent, a 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 inclusion stems from a 2020 executive order by President Trump restricting U.S. investment in Chinese military entities. The order mandates divestment from listed companies and prohibits further investment.

The DOD list identifies companies believed to contribute to PLA modernization through technology, expertise, or research. While initially comprising 31 companies, the list has expanded since its inception, leading to the delisting of several companies from the New York Stock Exchange.

Tencent's inclusion, announced on January 7th, prompted an immediate response. A Tencent spokesperson issued a statement to Bloomberg, asserting: "We are not a military company or supplier. Unlike sanctions or controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."

This year, the DOD removed some companies previously listed, suggesting a process for removal exists. At least two companies have successfully petitioned for their removal in the past, leading to speculation that Tencent will pursue a similar course of action.

The publication of the updated list triggered a decline in the stock value of several named companies, including Tencent. Tencent shares experienced a 6% drop on January 6th, with subsequent downward trends attributed to its inclusion on the DOD list. Given Tencent's significant global presence—the world's largest video game company by investment and a major global player—this designation carries substantial financial implications for the company and the U.S. investment market.

Tencent's gaming division, Tencent Games, operates as a major publisher and investor. Its portfolio includes significant stakes in prominent studios such as Epic Games, Riot Games, Techland (Dying Light), Don't Nod (Life is Strange), Remedy Entertainment, and FromSoftware, alongside investments in numerous other developers and companies like Discord. This extensive network highlights Tencent's broad reach within the gaming industry, a market capitalization nearly four times that of its closest competitor, Sony.