Group Tencent Announced today (Thursday) that it plans to distribute more than $ 16 billion of its shares in JD.com to all its shareholders, as a one-time dividend, in response to the ongoing pressure exerted by China’s central government on private technology giants to curb their expansion. Following the split, Tencent’s stake in JD.com dropped from 17% to 2.3%, and it will no longer be the company’s largest shareholder.
In the past year, the Chinese government has increased its control over the country’s private market, and especially the technology giants, in order to curb their strengthening. The pressure exerted by the government was made through partisan-public criticism of the technology industry, intense publication of detailed rules aimed at closely monitoring unfair competition in the private market, huge fines imposed on private businesses and demands from companies to completely reshape their business structure.
Tencent explained its move, saying that JD.com has reached a point where it can self-finance its growth, so now is the right time to transfer most of the company’s control to shareholders. But experts recognize in this move by Tencent, as mentioned, surrender in the face of the ongoing pressure coming from above, and obedience to Beijing’s directive to dilute its dominance in the market, in order to better fit the agenda of the Chinese authorities.