Investors hoping for more clarity on China tech’s big transition will be disappointed. Tencent executives talked up a 'new paradigm' for local companies: a Beijing-led shift away from reckless expansion and zero-sum competition to more sustainable growth and efficiency. But even after reporting a worse-than-expected 25% year-on-year plunge in adjusted quarterly earnings, it's clear that the full extent of financial damage from new rules and policies have yet to come to light.
a "new paradigm" for local companies: a Beijing-led shift away from reckless expansion and zero-sum competition to more sustainable growth and efficiency. But even after reporting a worse-than-expected 25% year-on-year plunge in adjusted quarterly earnings, it's clear that the full extent of financial damage from new rules and policies have yet to come to light.
Take Tencent's core video-games business, where rules introduced last year restricted how much time and money kids can spend on the pastime. Those under 16 make up a tiny percentage of total player spend, but the company was nonetheless hit by "indirect effects" of shifting resources away from developing new games towards enforcement.