Reassurances that the recent tutoring industry crackdown was aimed at easing Chinese parents’s financial burdens turns out to have been only partly true. As the latest purges of overseas tutors from these platforms show, the crackdown was also aimed at ending foreign influence in the industry.
Could the same follow-up action be reasonably expected of “spiritual opium”, online gaming? What might that mean for the hundreds of billions still locked up in VIEs such as Tencent?
Moreover, what about the pending Bytedance IPO? Could “inappropriate” short-form videos – probably bigger time-sucking distractions for the nation’s youth than games – be next for criticism by state-run media? If so, why would China want to allow that tool to fall under the influence of foreign investors?
The Greater Bay Area has been at the vanguard of private-sector development of industries such as online tutoring and gaming. This is the home of companies such as Tencent because of the ease in melding entrepreneurial minds in Shenzhen, China’s experimental city, with capital-raising minds in Hong Kong, China’s offshore financing center.
Those advantages are increasingly starting to be seen as baggage. The question every foreign investor in the GBA should be considering now is whether China is reversing the push of the past four decades into greater private-sector participation in the economy, while at the same time cleansing industries of their foreign influence. It is hard to avoid that conclusion after witnessing what has been happening here over the past few weeks.