Tencent says inclusion on US government blacklist is ‘a misunderstanding’
Update: Tencent says it believes its addition to a US list of companies believed to be connected to China’s military is a “mistake”
Correction: An earlier version of this story incorrectly stated that Tencent held a 40% stake in Epic Games. Tencent is actually a minority shareholder of Epic Games with approximately 29% of fully diluted shares.
The United States government has added Chinese gaming giant Tencent to a ‘blacklist’ of companies it believes are linked to the Chinese military.
While the Pentagon’s designation carries no specific sanctions, it discourages American companies from dealing with its members.
The ‘blacklist’ originates from an executive order in 2020, which prevented US companies from investing in companies with ties to the Chinese military.
Update
In a statement issued to VGC, Tencent has said it believes its inclusion on the list of Chinese Military Companies (CMC) is a “mistake” which it will seek to have corrected.
“As the Company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the Chinese Military Companies (the “CMC List”) CMC List is a mistake,” Tencent said.
“Unlike other lists maintained by the U.S. Government for sanctions or export control measures, inclusion in the CMC List relates only to U.S. defense procurement, which does not affect the business of the Group.
“The CMC List is also distinct from the Non-SDN Chinese Military-Industrial Complex List (NS-CMIC List) maintained by the U.S. Office of Foreign Assets Control, and inclusion in the CMC List will not prohibit any persons (other than the Department of Defense) from business dealings with the Company, including transacting in the securities of the Company.
“The Company intends to initiate a Reconsideration Process to correct this mistake. During the process, it will engage in discussions with the U.S. Department of Defense to resolve any misunderstanding, and if necessary, will undertake legal proceedings to remove the Company from the CMC List. The Company will make further announcement(s) as and when appropriate.”
Shares in Tencent, which is the world’s biggest games company, fell as much as 7% following the news. Tencent has invested in more than 800 companies. That includes a stake in Epic Games, and shares in Activision Blizzard, Ubisoft, and more.
Alongside Tencent, another company, battery maker CATL, was also added to the list of companies believed to have connections to the Chinese military.
Speaking to The Verge, a spokesperson for Tencent said it planned to push back on the designations.
“We are not a military company or supplier,” Tencent spokesperson Danny Marti said in a statement. “Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding.”
