Analysis
Hard Landing For Softbank In China? Masayoshi Son Says Scaling Down Investments Due To Regulatory Uncertainty Caused By Beijing Tech Crackdown
- Japanese investment conglomerate SoftBank Group will significantly scale back on its new investments in China due to regulatory uncertainty engendered by Beijing's crackdown on tech and other sectors, Chairman and CEO Masayoshi Son said today.
- SoftBank’s stake in Alibaba, an e-commerce behemoth, that was worth hundreds of billions of dollars was significantly dented when Jack Maa-led firm found itself in the crosshair of Chinese authorities.
- Softbank's vision fund has invested nearly $11 billion in to Didi Chuxing, a Chinese ride-hailing app but shares of the company have tumbled after Chinese authorities launched a crackdown on the company
Masayoshi Son, chairman and chief executive officer of SoftBank Corp. (Koki Nagahama/Getty Images)
Japanese investment conglomerate SoftBank Group will significantly scale back on its new investments in China due to regulatory uncertainty engendered by Beijing's crackdown on tech and other sectors, Chairman and CEO Masayoshi Son said today(Aug 10), Nikkei reported.
Son's Softbank has invested billions of dollars into some of China's biggest tech companies, including Didi Global, ByteDance and Alibaba Group Holding.
SoftBank’s stake in Alibaba, an e-commerce behemoth, that was worth hundreds of billions of dollars was significantly dented when Jack Maa-led firm found itself in the crosshair of Chinese authorities. Alibaba, SoftBank's most valuable asset, has declined 14% since July.
Chinese startup constituted close to a quarter of the company's flagship vision fund.
Son said that Softbank would adopt a “wait-and-see stance” until the situation settled in what he hoped would be a year or two.
"I strongly believe that China's AI technology and business model will continue to innovate," Son said in a news conference. "However, in investment activities, various new regulations have begun, so I want to wait and see what kind of regulations are implemented and what kind of impact they have on the stock market."
"If the situation becomes clear, there is a possibility that we will actively engage in investment activities," he said.
Softbank's vision fund has invested nearly $11 billion in to Didi Chuxing, a Chinese ride-hailing app but shares of the company have tumbled after Chinese authorities last month ordered app-store operators to remove the app of Didi’s China arm, saying it has serious problems involving illegal collection of personal data. The regulator alleged Didi had illegally collected users’ personal information and asked the company to fix the problems.
SoftBank also reported a decline in net profit to $6.9bn between April and June this year, a 39% drop on the same period last year. The company attributed it to smaller gains from the sales of its investments and a lack of blockbuster IPOs.
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