Chinese tech giant Tencent has strongly rejected its recent designation as a "Chinese military company" by the US Department of Defense (DoD) and announced it may pursue legal action if the classification is not reversed.
The company, which owns Riot Games and holds stakes in numerous major gaming studios, was added to the DoD's Chinese military companies blacklist this week. In response, Tencent issued a statement calling the designation a "misunderstanding" and emphasizing that it is "neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base."
While the blacklist does not impose direct sanctions, the designation has already impacted Tencent's business, causing its stock to drop 7% in Hong Kong trading following the announcement. The list is designed to discourage US investors from engaging with listed companies suspected of having ties to China's People's Liberation Army.
Tencent plans to initiate a formal reconsideration process with the DoD to address what it calls a "mistake." If discussions fail to resolve the issue, the company stated it is prepared to take legal action to be removed from the list.
The gaming conglomerate noted that the designation only affects US defense procurement and does not restrict other business dealings. However, as one of the world's largest companies with extensive investments in US gaming studios like Epic Games, Larian, FromSoftware, and Ubisoft, Tencent appears determined to clear its name.
There is precedent for successful appeals, as Chinese electronics manufacturer Xiaomi Corporation managed to get removed from the same list in 2021 after challenging its designation.
The blacklisting comes at a challenging time for Tencent, as reports indicate its bid to acquire full control of Ubisoft has stalled due to resistance from the gaming company's founding Guillemot family.