The headquarters of SoftBank in California Photo: VCG

 
Softbank Group’s recent ambiguous signals toward investing in the Chinese market have sparked widespread discussion across global markets. While reiterating the company’s commitment to the growing Chinese tech sector, CEO Masayoshi Son reportedly said that the company would pause investment in China and adopt a “wait and see” strategy, citing China’s recent regulatory actions against some internet firms.

After Son’s remarks drew much attention, SoftBank’s China arm, SB China Capital (SBCVC), on Wednesday issued a statement saying it remains committed to investing in high-quality, high-tech, high-growth companies in China. However, the statement, which made no reference to Son’s comment of pausing investment in the market, reportedly has since been deleted.
 
The Japanese company is currently managing the world’s largest private equity fund, with total investment in China accounting for 44 percent of the value of its total investments as of March 2021, a Citibank report estimated. 

It is fair to say that the Chinese market played a crucial role in the company’s rise. It is also understandable that given its massive profit drop, SoftBank wants to roll back some of its investment plans. Son’s speech came after the Japanese investment conglomerate reported a nearly 40 percent plunge in its net profit in the quarter ending June. However, its CEO’s ambiguous yet apparent attempt to use China’s regulatory actions to justify its strategy is quite appalling.

To be clear, SoftBank’s investments in China are profit-driven and it has made a massive amount of money in China; however, by any stretch of imagination, the investments are not donations aimed at helping the Chinese tech sector or the Chinese economy. It would be a grave mistake for Softbank or any other foreign firm to portray itself as “the God of wealth” for the Chinese market.

Obviously, SoftBank is free to make adjustments to its investment strategy based on its own needs, but it also must understand that investing in China means that it has to respect and abide by China’s regulatory actions in the capital market.  

As for the Chinese economy, the top priority remains on ensuring continued recovery from the COVID-19 pandemic, promoting an economic structure upgrade as well as tackling problems in certain sectors and businesses to pave the way for stable and safe development. Needless to say, that won’t change regardless of the external environment. 
 
In the Chinese digital sector, which reached 39.2 trillion yuan and ranked second in the world in 2020, targeted regulation is necessary to maintain sustainable growth and coordinate its development with other sectors. Chinese regulator’s efforts in this regard won’t change for the foreseeable future regardless of what some foreign businesses choose to do or not to do. 

SoftBank and other multinationals can “wait and see.” But for SoftBank and other foreign companies, misjudging China’s economic policies and regulatory environment could mean risk of being rendered irrelevant in one of the most important technology hubs in the world.    
 
The author is an editor with the Global Times. bizopinion@globaltimes.com.cn