• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business

Macro risk may overtake regulatory risk for Chinese Tech firms

3 years ago
in Business, Features, highlights, Home, home-news, latest News, Technology
2 min read
0 0
0
60
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Macro risk may overtake regulatory risk for Chinese Tech firms

Economic challenges associated with slower consumption spending and stringent Covid-19 lockdowns have become more important drivers for Chinese internet companies’ credit profiles and will dampen industry profitability and cash generation in the short term, says Fitch Ratings.

Regulatory risk may pose a diminishing threat for tech companies as policymakers focus on the need to support the economy, but the aftermath of last year’s policy tightening will continue to present difficulties for some companies.

Fitch expects economic growth in China to fall to just 3.7% in 2022 (2021: 8.1%), partly reflecting the impact of the lockdowns. The recovery in activity is likely to be restrained and subject to setbacks, given that the government’s zero-Covid policy is set to remain in place well into 2023. There is a high risk of new lockdowns if outbreaks re-emerge.

Although lockdowns can lead to some spending shifting to online firms, weaker economic growth will weigh on overall market growth. Thus, even though we expect online retail’s market share to rise to around 29% of total retail in 2022, revenue will rise in the mid-single digits only, slower than in 2020 or 2021.

Structural changes may affect the strength of the recovery in consumption in 2H22. Consumers are becoming more price-sensitive amid the evolving pandemic situation and macro-economic uncertainties, and demand has risen for essentials but fallen for non-essential goods.

Shifts in demand could become more entrenched if more extended lockdowns emerge, weighing on sales of certain goods categories, such as apparel. This could present a risk for companies such as Vipshop Holding Limited (BBB+/Negative), which focuses on apparel and cosmetics.

RelatedPosts

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns

Troubled Manchester United Boss Amorim Contemplates Future After Grimsby Debacle

African Athletes Shine in 2025 Diamond League: A Celebration of Talent

Many Chinese internet companies have adjusted their strategic focus in the challenging macro environment towards optimising costs, rationalising non-core businesses and pursuing more prudent M&A and investments.

All these adjustments should help reduce pressure on profitability and cash generation and preserve liquidity and financial flexibility. Even so, we still expect 2022 to be another year of transition for most of Fitch-rated Chinese internet issuers.

There is also a risk that some Chinese internet firms could respond to the difficult demand environment by expanding into new business areas to drive sales. JD.com, Inc., for example, has considered and explored launching online food deliveries, which would pitch it against the sector’s dominant players such as Meituan (BBB-/Negative) and Alibaba Group Holding Limited (A+/Stable).

Increased competition could put downward pressure on ratings for a number of internet companies, but some, such as Meituan, have less headroom than others at their current rating level.

It is too early to say whether the more conciliatory government comments over the past few months and other recent developments mark a sustained alleviation of regulatory pressure on China’s large internet companies.

These developments include the resumption of issuing monetisation licences for new online games, the potential conclusion of an investigation into rideshare firm Didi and the government’s approval of plan for “healthy” development of the payment and fintech sectors. Still, we believe regulatory risk will recede as a sector credit concern relative to macroeconomic factors.

Risks to the creditworthiness of specific companies will decrease as they are released from or deal with regulatory challenges, allowing them to focus more on core business challenges and growth.

However, the repercussions of previous regulatory actions will continue to be felt and regulatory risk will remain an important consideration for Chinese internet businesses’ ratings, regardless of potential positive developments over the next few months.

Tags: Covid-19covid-19 lockdownseconomic growthMacro risk may overtake regulatory risk for Chinese Tech firmsmacro-economic uncertainties
No Result
View All Result

Highlights

BoG Designates Digital Credit Services as Non-Bank Financial Service

Finance Minister Urges Fairer Global Framework as Africa’s Debt Burden Hits $1.3 Trillion 

UK Pledges Support as Ghana Faces GIABA Assessment Amid Gold Sector Scrutiny

BOST Holds 2025 AGM, Tasked to Deliver Profitability and Support Green Transition

Brussels Airlines Adds 5 More A320neo Aircraft to its Fleet

Bog Governor Hints at $4bn Inflows From COCOBOD Financing Deal to Support Cedi

Trending

Business

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns

August 29, 2025

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns Ghana Link Network Services Ltd,...

Troubled Manchester United Boss Amorim Contemplates Future After Grimsby Debacle

August 29, 2025

African Athletes Shine in 2025 Diamond League: A Celebration of Talent

August 29, 2025
Governor of the Bank of Ghana (BoG), Dr Johnson Asiama,

BoG Designates Digital Credit Services as Non-Bank Financial Service

August 29, 2025

Finance Minister Urges Fairer Global Framework as Africa’s Debt Burden Hits $1.3 Trillion 

August 29, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.