China’s Tech Giants Are Primed for More Pain

For a few shining moments, Tencent and the rest of China’s national champions seemed on the verge of upstaging Silicon Valley. Then everything went to hell. Early salvos in a trade war with the U.S. and whispers about stretched valuations in smoky Shanghai parlors gave way to serious trauma for just about every major Chinese tech company. Now that the pace of mega-fundraisings has ebbed, and Beijing is going to hitherto-unseen extremes to censor the last bit of fun left in China’s servers, the industry is primed for more pain.

Once the strongest of China’s national champions, the social media giant has lost about 38 percent of its market value, some $220 billion, since peaking in January. Chinese regulators have choked off the country’s pipeline of video games, a principal source of Tencent’s revenue, amid concerns about game addiction. A stopgap approval process ended in late October without a new channel for game revenue licenses, leaving Tencent and other publishers in limbo.