Big Tech changed in China. The country's leading internet conglomerates experienced their first-ever quarterly revenue drops and job cuts as a result of the government's campaign to stamp out the swine flu.
The start of a new era in the way China's tech industry operates came from an explicit strategy by the chinese government. Economic growth and other priorities have been sacrificed by the president in exchange for control. Tech giants were left uncertain about what to expect next after the government squeezed them for two years.
The truce seems to have been struck by the tech sector. The Communist Party decided to let go of its campaign of sudden, severe Crackdowns in order to inject more clarity about what it considers to be good corporate citizenship. In exchange for this predictability, the companies have aligned themselves with the agenda of the president to curtail tech monopolies and promote what he describes as common prosperity. The decade long internet gold rush is over.
According to a political science professor at the City University of New York, the private sector has become tame. The problem is that he damaged the confidence of some entrepreneurs and foreign investors with his policy.
China's largest internet companies used to look similar to US giants like Apple and Amazon.com.
Government officials in the US couldn't agree on how to deal with giants. When the products its biggest tech companies offered became pervasive in all aspects of the country's online life, China snapped into action. Jack Ma was the first and most visible person to speak out in favor of the government. The Chinese government fined Alibaba a record $2.8 billion for monopolistic behaviors in the spring of 2020 after quashing Ma's plan to take ants public. It ordered a security review of Didi Global after it was fined over a million dollars. Beijing stopped approving video game releases and forced a large portion of the private education sector to become nonprofits.
Difficult economic conditions weighed on tech companies large and small as these measures kicked in. Preqin said that China-focused venture raising fell in the first 11 months of the year. The high-flying consumer internet businesses that investors used to love were replaced by companies that were more in line with the policies of the president. Chibo Tang is the managing partner of Gobi Partners. Put your money in the correct place.
DanielZhang has appeared to indicate that he will follow that direction as well. He believed in the prospects of China's economic and social development. The long-term goals of China are in line with the development goals ofAlibaba. Requests for comment were not responded to by the two companies.
Billions of dollars of corporate donations to social causes and signs of submission have been loosened up by China. The company needs to clear a path for an IPO before it can be regulated like a bank. The government let Didi's top executives off with fines for violating data security rules after they were speculated to end up in prison.
More than a year ago, the state press accused companies of peddling spiritual opium. New video game releases were approved after an eight-month halt. Foreign blockbusters like Riot Games' Valorant and Pokémon Unite were approved in late December.
In his first economy-planning meeting after securing an historic third term, Xi vowed to support platform companies in playing leading roles in creating jobs and international competition. The local party boss paid a visit to the company's headquarters to give a speech. It was a sign of a change of fortune for the Chinese company that was hardest hit by the government.
Chinese tech companies have become more risk-averse and less ambitious as a result of adjusting to the government's wishes.
Tech executives and investors are looking for ways to cut costs. The big spenders of the past years are trying to stay profitable by not spending on new users or content. They are shutting down businesses that can hurt the bottom line, while forgoing venture investments that don't promise an immediate payoff ByteDance Chief Executive Officer Rubo Liang told employees at a December town hall that they needed to spend money where it was the most worthwhile. The growth of revenue at the Chinese owner of TikTok has slowed. A company spokesman wouldn't say anything.
Tech companies in China are branching out for growth. Among them are TikTok and Shein, both of which specialize in fast delivery of goods and content to global Gen Z customers. As tensions rise between the US and China, they are being criticized for being formidable threats to US companies. TikTok is seeking a security agreement with the Biden administration to spare itself from a US ban floated by the previous president. They won't come through until the issues are solved.
The fraught US-China relationship will make it difficult for Chinese companies to build trust with regulators and government officials.
Workers are still adjusting to the tech slump. A record number of college graduates are expected to enter the labor market in the next few years. Many people were about to enter a booming tech industry, only to find that the payouts were not as high as they had expected.
A young man who studied automotive technology in college applied for more than 100 tech jobs. He was interviewed by a Shein-inspired e- commerce startup. The founder wanted to know if he could take frequent overtime. The country's young people are embracing the "lying flat" lifestyle as a response to a worsening economy. The startup would have paidZhang half what he earned as an instructor. He says it's more stable. "I don't want to be burnt out for just a job."