Beijing’s crackdown on its tech giants is fueling a noticeable phenomenon: it’s opened the spending floodgates.
China’s largest internet corporations are digging deep into their pockets to open up new avenues of growth as Beijing curtails their most lucrative businesses from fintech to e-commerce. Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Meituan have all warned investors in recent weeks they’re prepared to open their coffers to expand in areas such as cloud computing, autonomous driving and artificial intelligence. The coming deluge promises to transform the internet landscape by funneling capital into fundamental technology and infrastructure — not coincidentally priority areas for the Communist Party.
Of the three, Beijing-based Meituan was the earliest to throw caution to the wind and also the one most accustomed to sacrificing profits. The food delivery giant sank into the red in the December quarter and warned of further losses, as founder Wang Xing boosted spending on logistics networks and supply chain capacity to bolster his new online grocery ambitions. In April, it raised a record $10 billion to develop advanced solutions such as autonomous delivery vehicles and robotics, days before China’s monopoly watchdog unveiled a probe into the corporation for alleged antitrust violations.
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