Earlier this week, the US Department of Defense added a new group of companies to its Chinese military companies blacklist. Although being on this list does not carry direct sanctions, it significantly affects the company’s reputation and discourages US investors. Tencent characterized the designation as a “misunderstanding” and has expressed its intention to “initiate a Reconsideration Process to correct this mistake.”

Companies on this list are suspected of having ties to the People’s Liberation Army or assisting it. However, Tencent firmly believes it should not be associated with the military. The company’s statement reads, “As the Company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake.”

The foundation of this blacklist lies in an executive order from former President Trump, which previously led to US firms being barred from investing in certain Chinese entities. However, this particular list does not impose restrictions on business interactions with Tencent apart from the Department of Defense.

“In contrast to other government sanctions or export control lists, inclusion in the CMC List pertains only to US defense procurement, which does not impact the Group’s business operations,” the statement asserts. Additionally, it clarifies that inclusion in the CMC List does not inhibit any entities (other than the Department of Defense) from engaging in business dealings with the Company, including acquiring its securities.

Following its addition to the list, Tencent experienced a 7% decline in stock value on the Hong Kong market, revealing a tangible adverse impact. Consequently, the company wishes for its status to be re-evaluated and is prepared to pursue legal actions if the “mistake” is not rectified.

“During the process, Tencent intends to communicate with the U.S. Department of Defense to resolve any misunderstandings, and if required, will initiate legal proceedings to have the Company removed from the CMC List,” the statement emphasizes.

Other Chinese firms have successfully negotiated their removal from the list, like Xiaomi Corporation, renowned for its smartphones, which was taken off the list in 2021.

As one of the world’s largest corporations and the leading video game publisher, Tencent is deeply involved in numerous business dealings in the US and worldwide, owning companies like Riot Games, Funcom, and Grinding Gear Games, which recently launched Path of Exile 2 in early access.