BY ROBYN MAK

A new Chinese technology trinity is set to rise. Following in the footsteps of Baidu, Alibaba and Tencent are ByteDance, Ant and Didi Global. After a brutal year for the entire sector, the path back through new rules and a slowing economy looks tough, but Ant, Jack Ma’s financial services marketplace, will lead the uphill march.

All three have taken significant hits. Didi, the ride-hailing company, lost half its market capitalisation in a few short months after a New York initial public offering in June, and in December it started the process of delisting its shares amid pressure from Beijing. Privately held stakes in TikTok- owner ByteDance, once pegged at $400 billion, have been changing hands for less. And Ant backer Warburg Pincus recently slashed its valuation by 15%. 

Relocating to the Hong Kong bourse should put Didi back into Beijing’s good graces. Likewise, Ant is restructuring its entire payments-to-lending business and brought in new state backers to satisfy officials.

Reviving growth will be less straightforward. Didi faces a raft of new rules aimed at protecting China’s gig economy workers. Those range from providing social insurance to a cap on how much they can siphon from driver fees. That will push up costs at the unprofitable company.

For ByteDance, an online advertising slowdown looms large. Efforts to diversify into video games and education have led to layoffs. Cybersecurity authorities also are preparing restrictions on how algorithms can be used to reel in viewers. Douyin, the Chinese version of TikTok and ByteDance’s main money-spinner, has started to let users opt out of personalised recommendations.

Ant has the clearest path ahead. Its fast-growing credit business was curbed, but the company retains its payments dominance. And in a sign that regulatory pressure may be easing, its consumer finance division in June secured an important licence in micro-lending, insurance, fixed income securities and more, putting a vital part of its operation back on track.

What’s more, the central bank in November accepted the application of a personal credit-scoring business 35%-owned by the company. Such progress might even pave the way for a long-delayed IPO and puts Ant in position to be the best of the BAD bunch.  

First published December 2021