China is attempting to acquire minority holdings with special rights in the local subsidiaries of Tencent Holdings Ltd. and Alibaba Group Holding Ltd.
Beijing started purchasing these "golden shares," which typically represent 1% of a company, in private internet media companies more than five years ago in an effort to gain influence. Government-backed funds or businesses purchase these "golden stakes" in exchange for board seats and/or the ability to veto important corporate decisions.
In order to tighten control over content at the e-commerce giant's streaming video unit Youku and web browser UCWeb, an entity under the state investment fund established by China's internet regulator last week purchased a 1% stake in an Alibaba unit in Guangzhou, according to the report, which cited people familiar with the matter and public records.
Sources say that although the terms of the government's plan to acquire golden shares in Tencent are still being worked out, they will involve a holding in one of the company's key operating subsidiaries in China.
Chinese multinational technology corporation Alibaba Group Holding Limited, better known as Alibaba, specialises in e-commerce, retail, the Internet, and technology. The company, which was established on June 28, 1999, in Hangzhou, Zhejiang, offers electronic payment services, shopping search engines, cloud computing services, as well as consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services via web portals. It manages a diversified portfolio of businesses in many different industries around the world.