• China has stepped up its scrutiny into several Chinese tech giants and imposed restrictions on sectors such as education in the past few weeks — a move that surprised investors and businesses, and triggered a market sell-off.
• Companies need to get used to the pace of reforms, said Charles Li, former CEO of Hong Kong Exchange and Clearing.
• Li said that China's regulatory model is different from the U.S. — and that's an advantage for the Asian giant.

Beijing's recent regulatory crackdown is a "wake-up call" for China's corporate giants which should not assume they are untouchable, says Charles Li, former CEO of Hong Kong Exchange and Clearing.

Still, he said he doesn't expect the latest regulatory reforms to affect Hong Kong's markets in the longer term.

China has stepped up its scrutiny into several Chinese tech giants and imposed restrictions on sectors such as education in the past few weeks — a move that surprised investors and businesses, and triggered a market sell-off.

Companies need to get used to the pace of reforms, Li said in an interview with CNBC's Emily Tan.

"Because you can't take for granted that when your company is powerful enough, nobody will be able to touch them," said Li, who is now the founder of investment platform Micro Connect. "It is something that probably is a little bit of an awakening and wake-up call."

In the past few months, China has clamped down on areas from anti-monopoly practices to cybersecurity, and tightened rules on data security. 

Regulators have tightened their hold on domestic tech giants for much of the past year, from the suspension of Ant Group's $34.5 billion listing, to Alibaba's $2.8 billion antitrust fine, and a cybersecurity probe into ride-hailing firm Didi. 

U.S. vs China regulations

In recent weeks, tech and education stocks have sold off as the country increased regulatory oversight further.

Li said that China's regulatory model is different from the U.S. — and that has an advantage for the Asian giant.

"When the U.S. government wanted to crack down on monopoly, it could take years and decades simply because of the institutional checks and balances," he said.

"China's model is slightly different — other people think it's a lot different," Li said. "That model allows them to do things quickly, identify issues decisively, and then make a policy right after that, and then move on to implement that."

Li isn't alone in pointing out the differences in China's regulatory system.

Billionaire investor Ray Dalio also recently told investors not to "expect this Chinese state-run capitalism to be exactly like Western capitalism."

He urged investors to understand that Chinese regulators are "figuring out appropriate regulations" in the rapidly developing capital markets environment.

However, Li doesn't think that China's crackdown will hurt Hong Kong markets in the long run.

"This swing between fairness and equity and efficiency is a very healthy self-regulatory move that will allow us not to (become too excessive) and allow the society, allow the economy to move in greater harmony," he said.