China slaps hefty fines on Alibaba, Tencent as Part of a regulatory crackdown
As part of China’s ongoing regulatory crackdown, Tencent and Alibaba, the country’s two digital payments giants, have been hit with significant penalties. Tencent and its payments subsidiary Tenpay were fined around 2.99 billion yuan ($410 million) by the People’s Bank of China for past regulatory breaches related to payment services in mainland China.
Tencent stated that it believes financial regulators will now focus on normalized regulation, promoting healthy development in the platform economy and supporting platform companies in financial inclusion. The penalty is not expected to have a material adverse impact on Tencent’s overall operations and financial position since Tenpay has completed self-inspections and made corresponding rectifications.
Similarly, China’s central bank announced a fine of 7.123 billion yuan (approximately $1 billion) on Ant Group, Alibaba’s fintech affiliate. The fine was imposed for various illegal activities, including corporate governance, consumer protection, banking and insurance practices, payments and settlement, anti-money laundering, and fund sales.
Alibaba had previously announced plans to split the company into six business units, with each unit exploring fundraising or IPOs to unlock shareholder value and foster market competitiveness. Alibaba’s share price has been affected by slowing economic growth and increased regulatory scrutiny. Jack Ma, Alibaba’s founder, who had been absent from the public eye, resurfaced a few times this year after keeping a low profile since his criticism of China’s financial regulators in 2020. China had canceled Ant Group’s record-breaking IPO in late 2020.