Once China’s darling, tech industry is burdened by covid and crackdowns

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Some in China’s tech industry fear that the best days of the sector may be behind it.

lockdowns at home and trade sanctions from abroad. These woes have investors fearing the ceiling for growth might be closer to their heads than they previously thought.“The optimism that I hear now is about Vietnam, Indonesia, Singapore,” said Duncan Clark, founder of Beijing-based consultancy BDA, who has worked with China’s tech industry since the 1990s. “The dynamism has shifted from China.”

“For several years, industry participants have overemphasized zero-sum competition, aggressive marketing, reckless expansion, short-term growth and corporate benefits, overlooking the most important elements of sustainable growth,” he said. One investor, speaking on the condition of anonymity because of the topic’s sensitivity, said the most startling measure was the ban last year on for-profit online tutoring, a popular service among parents eager to give their kids a leg up in school. The sudden wipeout of an entire, lucrative sector alarmed investors and reinforced the perception that regulations in China were fickle.

The coronavirus pandemic added to the challenges for the industry, with factory production suspended for weeks across the country and workers locked down in their homes with short notice.in a social media post last month that there would be broad fallout along the supply chain if Shanghai production remained suspended through May.

 

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