China is causing massive redesigns in the online technology space. Across all domains, the Asian nation is rewiring the architectural structures of popular digital firms like Didi, Alibaba and Meituan. And the most troubling part: no one knows what the final playbook would be.
China has paused edtech firms from going public or raising new capital. It has also asked a ride hailing company to stop adding new users. Honestly, when it comes to things like this, you will at least appreciate that we have something better than China: ability to rant in Nigeria – and keep going.
According to the New York Times, this high voltage searchlight which has been used to wage regulatory cleaning on these firms have wiped out more than $80 billion from the coffers of American investors like BlackRock and Sequoia: “These kinds of startups had attracted American investors like Sequoia and BlackRock, and previously earned a valuation from JPMorgan of more than $100 billion. That estimate was revised to $24 billion on Monday.” Most expect that $24 billion to hit below $10 billion by next month as China will turn some properties into pure non-profits!
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These new rules targeted some of China’s hottest software sectors — especially those with large American investment. The educational regulations, for instance, essentially bans tutoring companies from making profits, raising money, and listing on stock exchanges. The Chinese government said the move was due to the education sector being “hijacked by capital.” These kinds of startups had attracted American investors like Sequoia and BlackRock, and previously earned a valuation from JPMorgan of more than $100 billion. That estimate was revised to $24 billion on Monday, according toThe New York Times.
“The worst-case became a reality,” JPMorgan analysts wrote. “It’s unclear what level of restructuring the companies should undergo with a new regime and, in our view, this makes these stocks virtually uninvestable.”
The news has also wiped billions from publicly-traded companies like Chinese e-commerce giant Meituan, which offers ride sharing, food delivery, and travel booking. The company’s stock dropped 14% on Monday, following the news of regulations.
Regulations for delivery companies cover a broad range of labor issues, including a mandate that workers are paid at least the minimum wage according to where they’re working. The new rules also require less stringent algorithmic management to allow more time for deliveries, as well as access to social security and insurance.(Fortune newsletter)
When you talk of geopolitical risk, I am not sure the smarts in BlackRock had modelled what is happening in China now with its big tech. That explains why American firms must consider Africa where we treat investors better. I mean, there is no way any nation that is not China would destroy assets like this without an American ambassador raising an alarm on the need to preserve investments. But so far, no one is talking because China reports to none!
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Who would have spoken from Washington, Joe Biden? The things occupying the minds of politicians currently are Jan 6 Commission, politics around vaccination, and whether mask mandates can be entertained; so they don’t really have time to react to what China is doing to investment of Americans. When you think Nigerian politicians are ridiculous, just look at their American counterparts, and you will know that there’s problem everywhere in this world.
My only concern with what China is doing is whether the big ticket investors can flag China as ‘unsafe’ for investment, then somewhat shift the dollars to this side, even a quarter of their investment in China would put Africa in the global map, with regard to investment destinations. China has wiped off a lot of value from its tech space, yet these greedy investors can’t be ‘angry’ enough and turn their backs on China.
We have the numbers comparable to China, all the things they cite as obstacles will disappear, once the dollars start raining here. They just need to give us the benefit of doubt, reporting a billion dollar investment in the tech space in six months for a population of over a billion is both insulting and depressing, let’s hear $30 billion and compare the feelings.