The damage has been done. Some internet companies have been forced to shut down, while others are suffering from huge losses or disappointing earnings. Many publicly listed companies have seen their share prices fall by half, if not more.
In the third quarter of last year, China’s biggest internet company, Tencent, posted its slowest revenue growth since its public listing in 2004. E-commerce giant Alibaba’s profitability declined 38 per cent from a year earlier.
Didi, once the most valuable startup in the country, reported an operating loss of $US6.3 billion for the first nine months of 2021. In July, authorities stopped Didi from signing up new users and ordered app stores to remove its services pending a cybersecurity investigation.
Beijing’s crackdown is piling pressure on its tech comapnies.Credit:AP
The online-education and tutoring sector has nearly been eliminated after Beijing decided that the businesses created unnecessary burdens for parents and children, hindering a push to bolster the country’s low birthrates. Hundreds of thousands of people, if not millions, have lost their jobs.
Online social media and entertainment platforms are pulling popular content and influencers, wary of repeated government warnings that their products and stars are not ideologically appropriate for the young.
The video platform that laid off Zhao, iQiyi, had an abysmal quarter, losing about $US268 million. Its share prices fell 85 per cent from their high in 2021, reflecting investors’ concerns that the company, once aspiring to be China’s Netflix, will be short of shows that can attract more subscribers and advertisers.
The crackdowns are having a chilling effect on the job market. Many young Chinese are looking to the public sector for more stable positions, even though they pay less.
“The biggest problem for our industry is severe shortage of content supply,” iQiyi’s CEO, Gong Yu, told analysts in November. He blamed, in part, censors’ slow approval. IQiyi did not respond to requests for comment.
(Zhao confirmed the details in his social media account but declined to comment further.)
Many film, TV and streaming projects have been cancelled or killed over concerns of increasingly harsh and unpredictable censorship, said people in the industry.
One of the most anticipated movies for the 2021 Christmas season had to change its name to Fire on the Plain, from Moses on the Plain possibly because of its Christianity reference. Then four days before its release, the production team said it was postponed, without giving an explanation.
“Restrict this, cancel that. Regulate this, censor that,” Chen Jian, a stock market investor, wrote on the social media platform Weibo. This country “will become a cultural desert eventually.”
Beijing wants its cyberspace to become a tool of governance and national rejuvenation. And it will penalise anyone who fails to serve the goal.
In mid-December, the country’s internet regulator said it had ordered platforms to shut down more than 20,000 accounts of top influencers in 2021, including people who spoke ill of the country’s martyrs, entertainers involved in scandals and major livestreaming stars.
Alibaba was slapped with a record $US2.8 billion antitrust fine in September. That was followed by a $US530 million fine of Meituan, the food delivery giant, a month later.
Weibo, China’s Twitter-like platform, was fined 44 times between January and November. Douban, the popular film- and book-reviewing site, was fined 20 times.
Livestreamer Huang Wei, known professionally as Viya, was fined $US210 million for tax evasion. She lost more than 100 million followers after all her social media accounts were shut down.Credit:Bloomberg
In December, Huang Wei, a top influencer known as Viya who sells about everything under the sun on Alibaba’s Taobao platform — from Kim Kardashian’s fragrance (hawking 6,000 bottles in the first 30 seconds) to a rocket launch service (for $US5.6 million) — was fined $US210 million for tax evasion. She lost more than 100 million followers after all her social media accounts were shut down.
To prove their loyalty, many tech firms are positioning themselves to help build key technologies that will help the country break free from what Xi described as “stranglehold” weaknesses that the United States can exploit. That includes semiconductors, new energy and other advanced technologies.
A Beijing-based venture capitalist said his firm had given up on investing in consumer tech completely and has been busy persuading scientists and semiconductor engineers to start businesses. It has not been easy because not many scientists have the entrepreneurial drive, said the venture capitalist, who spoke on the condition of anonymity given the political environment.
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Li Chengdong, an e-commerce consultant who invests in startups, said some consumer internet companies he owned are struggling with higher compliance costs. “To stay on the safe side, they have to be stricter in compliance than what the government requires,” he said.
The crackdowns are having a chilling effect on the job market. Many young Chinese are looking to the public sector for more stable positions, even though they pay less.
There will be 10 million college graduates in China in 2022, according to the Education Ministry. About 4.5 million have applied to graduate schools, up 800,000 from 2021. More than 2 million people have applied to take civil servant examinations, up by 500,000, according to the Chinese state media.
