Chinese tech shares dip after report of JD.com subsidy campaign

By Scott Kanowsky 

Investing.com -- Shares in Chinese internet firms moved lower on Tuesday after a report that e-commerce giant JD.com (NASDAQ:JD) will pursue a $1.5 billion subsidy program added to investor concerns over how fierce competition in the country's tech sector may hit these companies' profits.

According to a report in the South China Morning Post citing two people with knowledge of the matter, JD.com is readying itself to launch the CNY 10 billion subsidy push in early March to enhance its ability to compete with PDD Holdings' (NASDAQ:PDD) cut-price shopping app Pinduoduo .

Shares in JD.com, as well as with PDD, fell on Tuesday, weighing on other big tech names like Alibaba Group Holdings Ltd. ADR (NYSE:BABA) and Baidu, Inc. (NASDAQ:BIDU).

The news comes as competition across the e-commerce segment as China is heating up, with food deliverer Meituan (HK:3690) earlier this month announcing earlier this month that it would hire as many as 10,000 new workers in the current quarter to counter a challenge from TikTok owner ByteDance.

Meanwhile, outside e-commerce, a move by China's government to end a crackdown on video games it deemed inappropriate has led businesses like NetEase, Inc. (NASDAQ:NTES) and miHoYo to step up their efforts to grab market share from industry leader Tencent.

Search engine operator Baidu (NASDAQ:BIDU) has also introduced a new artificial intelligence-powered chat service to attempt to siphon ad sales away from rivals Alibaba and Tencent.

Beijing has appeared to ease some of its restrictions on tech companies in recent months, ending a campaign to place new regulations on the sector in a bid to curtail its power and influence.

Chinese policymakers have instead signaled that they are now focused on boosting growth in these firms to help fuel a larger economic rebound after the recent removal of the government's strict zero-COVID policy.

But investors are fretting that Beijing's renewed focus on tech in China could intensify competition and spark a raft of corporate investment initiatives, which could ultimately end up weighing on profit margins.