Tencent inches ever closer to Chinese state with WeChat
Listen up, Naspers investors ... this is going to be big
There was a surprisingly muted response to news that Tencent was in discussions with the Chinese government about plans to link exit-entry permits for travelling between mainland China and Hong Kong and Macau to an individual’s WeChat account. (WeChat is a Tencent application.)
The Tencent share price ticked up for a few days but then settled back to around the HK$420 level where it seems to have got stuck in recent months. (JSE-listed Naspers has a 31% stake in Tencent.)The discussions highlight the Chinese government’s commitment to driving technology into as many spheres of public life as possible. It also highlights the close relationship that has inevitably grown between the government and the country’s leading technology companies – and none more so than Tencent. The group’s chairman Ma Huateng is a senior figure in the Chinese Communist Party.
The hope is that the WeChat app would make travel a little easier. Not everyone is delighted about the plan, particularly those in Hong Kong and Macau who take their legal separation from China very seriously.
WeChat is also working to develop a function similar to the Chinese Resident Identity cards, which are necessary for such things as checking into hotels and opening bank accounts. The WeChat electronic ID is already being tested in pilot programmes around the country.
Of course the much bigger picture is China’s social credit system, which is expected to be up and running by 2020. The system intends assigning a “social credit” rating to all of its 1.4 billion citizens and all businesses that operate in China based on social and economic data generated by government and private sector big data companies such as Tencent and Alibaba. But as much as it stands to generate huge business opportunities for Tencent, involvement in the system could create some investor concerns.