Hello everyone and welcome to ZD Tech, ZDNet’s daily editorial podcast. My name is Clarisse Treilles and today I explain to you why the zero Covid policy in China is helping to restore the image of tech players.
Baidu, Alibaba, Tencent, Xiaomi: you recognize them, they are the Chinese equivalents of “GAFAM”… renamed for short “BATX”. These behemoths share an enormous market: more than a billion inhabitants. But for several months, Beijing has been determined to make life difficult for them.
New regulations, cascading fines… China is stepping up surveillance for these tech companies – both for their local and foreign operations.
The economy put to the test of strict confinements
But since the arrival of the Omicron variant, this hostile policy has wavered. Why ? Because of the lockdowns. For several weeks, 19 Chinese provinces have indeed been under glass, including the Shanghai metropolitan area and its 26 million inhabitants.
Zero Covid policy obliges, the confinements are very strict: no question of filling out a certificate to go out for some fresh air. And as a result, supply chains are suffering. However, if the country’s economy is hard hit, one sector holds firm: home delivery applications. To feed the confined population, the platforms have developed efficient distribution systems. First by sourcing fresh produce from farmers. Then by recruiting armies of workers to deliver the orders.
In the end, the Beijing government is forced to admit it: Alibaba, Meituan and other digital platforms are very useful in times of crisis.
Beijing wants to calm things down
Will the Covid save the BATX from this battle waged by Beijing? According to some analysts, yes! According to them, the Chinese government would be ready to relax the regulations against Big Tech. the wall street journal argues, for example, that Beijing could push back on new rules aimed at limiting the time young people spend on mobile apps.
But beware: who says flexibility also says counterparties. The government could ask for a 1% stake in the capital of certain companies, such as Tencent and Meituan, a bit like with ByteDance, the parent company of TikTok.
By taking a small stake in the capital, the State would thus ensure that it had a say in business decisions. An unequivocal way to ensure that tech companies are aligned with its general policies.