Watching the Chinese technology sector over the last week has been a fascinating exercise. In a wide-ranging effort to transform the country’s technological landscape, China’s government has taken on whole industries such as edtech and also targeted individual companies like Tencent and Meituan.
It is simple to see the extent of financial loss. For example, the NASDAQ Golden Dragon China Index tracks U.S. companies doing business in China and fell 52 weeks ago from 20,893.02, to 10,672.37 yesterday. If you are interested in a more detailed picture of financial chaos, you can track both the on-shore decline and the foreign exchanges value of different Chinese technology companies.
Analysts and commentators often draw a line between last year’s Ant Group IPO and Jack Ma’s fall from grace. It’s quite reasonable. These are all changes in China. The regulatory environment for tech work will change.
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After looking at the situation, we noted last week that there was a possibility that investment in edtech could be slowing in the country if the government continues to push for tutoring firms to become nonprofit. This was done by the government, which also blocked tutoring firms from going public or raising foreign capital. The document was extensive. Natasha Mascarenhas provides a detailed read of the subject here.
This is bad news for startup investors. After all, if edtech investment could slow in the face of regulatory changes, what about other technology-influenced areas of business?
It is not difficult to find a negative case. It is much more intriguing to consider the positive side. Market watchers argue that, by taking down the largest Chinese technology companies, there is more space for small companies to grab a slice of the market.
Publiated at Wed 28 July 2021, 14:13:04 +0000