Tencent and CATL are planning legal action to challenge being placed on a Pentagon list as “Chinese military companies”, if talks with the US defence department fail to get their new designations dropped. The social media and gaming giant and the world’s largest electric vehicle battery maker both announced on Tuesday they would contest their inclusion on an annually updated list of companies determined to have links with China’s military machine.
Pony Ma, Tencent founder and chair, said in a statement that the company would “engage in discussions with the US Department of Defense” to be removed from Monday’s list, adding that “if necessary, will undertake legal proceedings”. He said Tencent was “neither a Chinese military company nor a military-civil fusion contributor to the Chinese defence industrial base”. CATL said in a statement it had “never engaged in any military-related business or activities”, the move was a “mistake” and was “expected to have no substantially adverse impact on our business”. It also said it would “proactively engage” with the defence department “to address the false designation, including legal action if necessary, to protect the interests of our company and shareholders as a whole”. Analysts said there was a strong precedent for Chinese consumer tech companies being removed from the list if they could prove wrongful designation. In 2021, consumer electronics group Xiaomi successfully removed itself from the Pentagon list when a federal court determined there was insufficient evidence for the designation. “We believe has a good chance to secure exclusion through US courts,” wrote Ivan Su, senior equity analyst at Morningstar, in a note to clients. On Monday, the Department of Defense also removed artificial intelligence group Megvii from the list. Tencent’s announcement comes after investors dumped shares in the country’s largest company by market capitalisation, with shares falling by 7 per cent in Hong Kong on Tuesda
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