The Chinese government is reportedly cracking down on would-be start-up investors.
Warburg Pincus and Temasek both have been bounced from an investment round in online bank WeBank, a Chinese financial technology (fintech) firm, the Wall Street Journal reported late Monday. According to the Journal's report, the move by Chinese bank regulators to bar foreign investors from buying into the China-based start-up forced it to take capital from other backers at a lower valuation.
It's a move that has the potential to crimp the flow of money that has come to the country to back budding technology and start-ups. But others say it's also a reminder that foreign governments have a different view of what it means to take part in an open market, and market watchers believe it's indicative of what challenges other investors may face as they look to profit from the scale of the world's most populous country.
"China is just an extremely difficult place for tech companies to gain traction and succeed," said Scott Kessler, equity research analyst with S&P Global Market Intelligence. "It's extremely difficult because… it's the best home-court advantage in the world. The government has afforded advantages to home-grown companies."