In a move that will make it harder to do business in the US, Tencent has been designated a Chinese military company by the US Department of Defense.
The company is a big player in the gaming world as owner of Riot Games but is also an investor in a raft of other ventures including Epic Games and Ubisoft.
It joins the list with lithium-ion battery maker CATL, whose batteries are used in EVs made by Tesla and Ford, among others; and drone-maker, DJI, which is furiously trying to get its name removed.
What Is the List?
The designations have been around since 2020 when President-elect Donald Trump created an executive order to stop US companies from making any kind of investment in businesses, which were deemed to have a connection with the Chinese military.
One company that fell afoul of this was the world’s biggest drone-maker, DJI, which was put on the list. This was despite its loud protests that it has nothing to do with the Chinese military and specifically that it has not been carrying out surveillance of ethnic minority groups in the country.
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Chinese phone maker, Xiaomi, was also on the list briefly but removed after a few months.
No Sanctions but Still an Impact
The designation doesn’t mean that companies will be hit with sanctions or a ban – unlike the one facing TikTok, for example. But it does mean that it is trickier for companies to do business in the US.
In fact, DJI launched its own lawsuit claiming that its designation on the list means it has “lost business deals, been stigmatized as a national security threat, and been banned from contracting with multiple federal government agencies.”
It says that some of its drones have been blocked from entering the US by Customs. The designation has also impacted its employees in the US who “now suffer frequent and pervasive stigmatization” and are “repeatedly harassed and insulted in public places.”
What Is Next for Tencent and CATL?
Both companies, like DJI, are saying that they will fight the designation.
“We are not a military company or supplier. 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.” – Danny Marti, Tencent spokesperson to the Verge
CATL spokesperson Fred Zhang also spoke to The Verge insisting that the company’s inclusion was “a mistake,” and stating categorically that “CATL is not engaged in any military related activities.”
Donald Trump is soon to be back in office, and this designation was as a result of his executive order. Could this be another way of “putting America first”?
