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Thread: A Twist: TikTok and "Golden Shares"

  1. #1

    A Twist: TikTok and "Golden Shares"

    Freedom of speech concerns aside for a moment, this is about control of companies located in China. Apparently, the Chinese government controls companies via something not widely known. It's called "Golden Shares".

    Essentially, the Golden shares give the Chinese government the final say on pretty much anything that goes on with the company. It is fascism in practice. The companies issue shares, sell shares, and trade shares in a pseudo-market model, but ultimate control is always with the state.

    Thus, arguments that a company such as ByteDance, the parent of TikTok, is a public company, and owned by global investors is not entirely accurate. Americans could own every share of ByteDance, but since China has the Golden Share, China still has control.

    Many investors may be completely unaware of this fact, even as they invest in Chinese companies.

    Alibaba is an example of company where American investors hold shares, but may not be aware of actual control:

    China’s Use of Golden Shares: A Case Study on Alibaba
    06/10/24

    In 2017, the Cyberspace Administration of China (CAC), China’s nominal internet regulator fully under the control of the Chinese Communist Party (CCP), ordered all internet news information service providers to implement the “special management” system. In the following years, the Chinese government utilized this system to exercise control and influence over Chinese technology companies involved in media and content.

    The use of “special management shares,” or “golden shares” grants the state a degree of control over an entity while still encouraging private investment. A government fund may take a small minority stake in a large media company or its subsidiary, and over time, the company can grow through foreign and domestic investment, competing on the global stage without the government losing all control and influence. The governing party’s objective was likely not intended to limit the power of private companies, but to encourage a symbiotic relationship between the government and China’s burgeoning media and tech industries.

    When examining private businesses in China, one might assume that control and influence are solely determined by majority ownership. However, for large Chinese tech companies, being owned via golden shares can translate to government control over content, major investment decisions, and even outright veto power.

    Here’s one example of this mechanism at work:

    Case Study: Alibaba

    The Chinese government has utilized golden shares in its relationship with Alibaba. In January 2023, CAC’s fully-owned fund, Online Investment Suicheng (Beijing) Technology Co., Ltd, obtained a 1% stake in Alibaba’s subsidiary, Guangzhou Antler Information Technology Co., Ltd. The CAC used the purchase to tighten control over content at the video streaming unit Youku and web browser UCWeb. Chinese corporate records also indicate that the subsidiary added a new director, Zhou Mo (周沫), who shares the same name as a mid-level official at CAC.

    Although there are typically no specific indicators in a Chinese corporate record that would explicitly identify a golden shares relationship, there are often clues. One is the commonly used 1% shareholding percentage. Additionally, the sudden appointment of new officers, such as Zhou Mo, with previously no known affiliation to a company like Alibaba, may also suggest government involvement. With the case of Alibaba, one clue is Sayari Graph’s “​​Owned by State-Owned Enterprise (SOE)” risk factor, which indicates that Online Investment Suicheng is ultimately owned by the state-owned CAC fund, China Internet Investment Fund Management Co., Ltd.

    Chinese state control and influence

    To date, the Chinese government has focused primarily on media and content entities, but the system could be extended to other industries. If so, this has major implications for foreign investors and others concerned about Chinese state influence, export controls, outbound investment regulations, or other issues.

    When analyzing Chinese corporate relationships, it is important to obtain a nuanced understanding of Chinese corporate governance. This requires an awareness of non-traditional methods of ownership and control, which includes the Chinese government’s recent use of golden shares.

    In our analysis, we identify entities tied to government holdings of large technology companies that have not been reported in the press, and highlight certain indicators to look for that might help identify a golden shares relationship.
    ...
    https://sayari.com/resources/chinas-...dy-on-alibaba/
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.



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  3. #2
    https://x.com/LindseyGrahamSC/status...28871807885637

    After having met with many people regarding the TikTok issue, it is apparent that what’s known as a “Chinese golden share structure” is standing in the way of saving TikTok.

    If a company has a “golden share structure ” it means that one of the shareholders is Xi Jinping, the head of the Chinese Communist Party. He owns you and makes all the decisions.

    While I want TikTok to keep operating in a manner consistent with our national security, it is long past time to deal with the golden share dilemma more broadly.

    I will soon introduce legislation with my Senate colleagues that prevents any company that has a “Chinese golden share” from being listed on any American exchange and further, remove any existing company that has a golden share structure from any American exchange.
    Of course Miss Lindsey wants a ban, but for investors, this is a real problem. Apparently part of the Chinese system is that the Golden Share agreements remain secret and hidden.

    Aside from government regulations or bans, an exchange does have some minimum standards for shares to be listed and sold on their exchanges. This lack of disclosure about who actually controls a company is problematic. Some people may still want to invest in Chinese companies, and they should be free to do that, but there should be transparency as to management and control.

    It's like investing in a US company, without any way to find out who the CEO and Board Members are.
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  4. #3
    So Xi is to Chinese corporations as AIPAC is to American Government?
    When a trumpet sounds in a city, do not the people tremble?
    When disaster comes to a city, has not the Lord caused it? Amos 3:6



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