China's tech giant Alibaba has pulled out its investments in Silicon Valley over fears of unfair treatment of Chinese companies doing business in the US. The report claimed that there has been a worsening climate for Chinese investors over increased scrutiny of deals from the Committee on Foreign Investments in the US.
According to the co-founder of private equity fund HAO Capital Charles Liu, several Chinese investors have decided to refrain from investing in the US and abandoned pushing through with further deals thereto.
He claimed that there has been growing uncertainty since the Committee has expanded its oversight on Chinese tech companies by virtue of a reformed act passed into law since 2018.
The said powers enabled the entity to scrutinize foreign, minority investments with US companies. The said Committee allegedly labeled these companies as having 'critical technology' such as semiconductors and dual-use technology that could be used for civilian and military purposes.
The rule was formalized in 2019, which covered foundational, and emerging technologies, most of which were offered by the Chinese firms. Chinese venture capitalists such as Sinovation Ventures and ZhenFund have altered their business operations.
Sinovation closed its US officers while ZhenFund also diverted its focus from US founders to Chinese entrepreneurs who have decided or is planning to divert their operations strictly within China. The Chinese investors said that they have abandoned their investments in US semiconductor design companies due to the scrutiny they would receive about their deals being subjected to the Committee's approval.
Alibaba experienced a setback in 2018 when the Committed blocked its 1.2 billion USD acquisition of US payments company MoneyGram. The deal was supposed to be financed by Ant Financial, the controlling owner of Alibaba.
At present, Alibaba chief executive Daniel Zhang shared that the company has focused on investments in India and Southeast Asian markets instead. Tencent, on the other hand, also shifted its focus on Europe and plans to invest at least 10 billion USD in European companies especially on German groups.
In other news, Tech In Asia reported that there has been a significant increase in the usage of remote office applications like Alibaba's DingTalk and Tencent's WeChat work in China.
Last February 3, 2020, more than 10 million corporations have employees working from home and used DingTalk to further their employment tasks. The number of users exceeded 200 million for that day only. By Wednesday, the application was labeled as China's top free application.
