Tech giant Alibaba and Jack Ma, Tencent, online taxis Didi to Baidu are being investigated by the Chinese government, some of which have been subject to heavy fines. This reduces their valuation and the question arises, is this action not even detrimental to China itself?
Even some analysts warned it was too risky to invest in Chinese companies because of the raid. "From our perspective, these look like bad own-goals because they wipe out billions of dollars of stock value quickly," said Richard McGregor, China expert and fellow at the Lowy Institute.
But it may be different from the perspective of China and its president, Xi Jinping, they must be acting with good reasons. "But from their perspective, they see in the long term, they want to make sure the company works not only for the benefit of the company but also for the government's interest," he explained.
He noted that some investors were overly optimistic before, that the companies were too big to touch. "There's nothing the Chinese Communist Party can't touch or bring back into their control, if they feel it's necessary," McGregor added.
The tech giants most at risk of being raided are those with large consumer contacts and wide exposure to the masses, where the big boss has power and influence that rivals the party.
"One thing that Xi Jinpin doesn't want is the creation of an alternative power center," McGregor said.
The technology sector makes up nearly a third of China's economy. But since investigations and fines on technology companies, their total share price has been cut by around USD 1.2 trillion in just 6 months.
The most pathetic of course Jack Ma. Not only do they never appear again, their companies Ant Group and Alibaba are limited in their scope of movement. Then recently, the online taxi giant Didi's app was removed from the online store.
Lastly, tech giant Tencent's shares fell heavily after Chinese state media Xinhua labeled online gaming an electronic drug.