Who is the CEO of the Chinese Tencent company
Tencent: The little-known co-owner of Tesla, Ubisoft and Spotify
Today, when a company Tencent has a stake in goes public, it usually results in multi-billion dollar valuations. Recently featured on the Kuaishou video app. What is the concept of the Tencent group, which hardly anyone except insiders can assign a face? Some key data for orientation: first profit making internet company in China, owner of Riot Games (League of Legends), Operator of "Asian Netflix" and one of the largest shareholders in Tesla. Plus one of the ten most valuable brands in the world.
One reads the name Tencent again and again in the business news. Small, in a subordinate clause. The Chinese group is now involved in 600 companies, well-known examples are Spotify, Tesla, Ubisoft, Activision Blizzard and Snapchat. The empire came into being in 1998 in Shenzhen, China, where companies such as Huawei, the drone and camera company DJI and the AI group Sensetime have their headquarters.
The Internet world started with the instant messenger OICQ, which later had to be renamed QQ because of the similarity to ICQ. After three years without a profit, the South African media group Naspers acquired a 46.5 percent stake in Tencent in 2001. By 2010, QQ's user base had grown to almost 650 million, making it the largest online community in the world at that time. The company became profitable through premium users of its messenger service and the sale of virtual goods, including various online games.
The gaming giant
The group recognized early on that gaming would be an eternally booming market and therefore founded Tencent Games in 2003. The first own game was in 2004 QQ Tang, the same name as the Chinese fruit gum. The Bomberman clone was followed by numerous similarly simple games in various genres.
While in the beginning the industry was pushing its way into the industry with manageably complex games from its own portfolio and licensing, from 2008 the decision was made to invest in existing developer studios. One of the most famous names at the time was Riot Games, which featured League of Legends had one of the hottest gaming irons out there. In 2011, with an investment of 189 million euros, the company became majority owner (92.78 percent).
But that didn't stop there. Countless investments followed to create partners in companies such as Epic Games (Fortnite, Gears of War), Activision Blizzard (Call of Duty, World of Warcraft) and the mobile giant Supercell (Clash of clans) to become. The Angry BirdsDeveloper Rovio, like many other smaller studios, was completely bought up.
Meanwhile, they are also really successful with their four own studios. The multiplayer online battle arena game Honor of Kings for mobile devices was released in 2015 and was the top-selling game and the most loaded app of all time by 2017. Until then it was Honor of Kings only available in China and was only launched in 2017 as a Arena of Valor implemented for the rest of the world.
Tencent is also working feverishly on its own gaming platforms. In 2016, the company launched the Tencent Gaming Platform (TGP) "The Blade". The Intel- and Windows-based console was only released in China and still has around 200 million active users - that's almost twice as many as Steam currently has. Wegame followed in 2017, a games market like Steam, which, in addition to downloading and streaming games, also brought various community features, such as rating games, with it. The service currently has around 70 million users.
In addition to the gaming division, Tencent has been investing in areas such as TV, music, comics and video streaming right from the start and now has solid ground under its feet in every division. Even a Google alternative called Sogou has been developed. The company's most prominent product is certainly Wechat.
Woolly milk sow
Wechat was introduced in 2011, back then as chat software for smartphones. However, the Whatsapp alternative has become something that is not known in the rest of the world - the egg-laying woolly milk pig. You can now use the app to pay, order food, look for jobs, book doctor's appointments or even make official applications, such as applying for a visa to the responsible department.
With a reach of 1.2 billion users per month, the app is one of the most successful in the world. 100 million overseas Chinese also keep in touch with their homeland in this way. Wechat is the central communication point for many Chinese, through which virtually everything is done. Companies in China also first set up a Wechat profile before they start creating their own website.
Österreich-Werbung also boasts a partnership with Wechat in 2018. With "In Tune with Austria" a mini-app was presented in the Wechat universe, which is supposed to function as a kind of Tripadvisor. Users can "observe what Austrians are doing and comment on all postings in the app. This is done via Wechat Moments and Wechat Friend Groups." In an interview with STANDARD, a spokesman for Österreich-Werbung said that it wanted to enable advertising for Austria in Wechat. Interested companies who want to position themselves in Wechat can also contact Österreich-Werbung in this regard.
King of copying
It all started with a copy of ICQ, and critics continue to accuse the company of primarily stealing ideas from others. "The problem with Tencent is that they don't have their own ideas - all of their products are copies," said competitor and Alibaba Group CEO Jack Ma.
Tencent is also often accused of being close to the Chinese government. The company is supposed to produce "patriotic games" on a regular basis, for example Clap for Xi Jinping: An aweseome Speech, The aim is to applaud the party leader as often as possible for 19 seconds. Allegations by US secret services that Chinese ministries are repeatedly playing funding towards Tencent have so far been denied.
When it comes to censorship, the headlines against the Chinese company are also piling up. Politically sensitive content, for example from Tiktok or the alternative Douyin, which is only available in China, is said to have been hidden on the Wechat platform. Numerous legal disputes between the companies followed. Tencent has now invested in direct Tiktok competitor Kuaishou, which plans to go public soon.
Tencent's most important app, Wechat, was also repeatedly criticized. The app is said to have been used to spy on users and for Internet censorship, reports researchers from the University of Toronto. Since 2017, the disclosure of almost all information in Wechat to the Chinese government has been part of the official data protection guidelines.
In the meantime, however, there are increasing disagreements with the Chinese government. In China, action against competition and data protection violations is intensified. Targets include its own technology giants, including Tencent. The authorities are also making the approval of new games increasingly difficult - "to protect young people". A major blow for the company.
Well through the crisis
From 2006 to 2016, Tencent stock was up 5,800 percent, and even if you look at the current curve, it is still trending upwards. Corona has also not harmed the company. The gaming boom in 2020 has also brought the share price of the Chinese group up quite a bit. Even lawsuits from Tiktok owner Bytedance and various vehicle technology manufacturers accusing Tencent of exploiting its dominant market position, among other things, had little influence on the positive trend.
Therefore, Tencent is unlikely to shake anything. Together with Netease, they have around 70 percent of the Chinese online games market. Globally speaking, they are the largest game developer in the world, ahead of giants like Activision Blizzard. Wechat's roots in everyday life in China will grow rather than shrink, even if they are no longer quite as united with the government as they were in previous years.
Investments in other future-oriented markets, such as the cloud sector or e-mobility, serve as additional pillars. Thanks to a cooperation with New Economy Movement, they are even among the top ten in the world in the blockchain sector. Just the announcement of the integration of the cryptocurrency XEM into the Wechat app catapulted the share value of the cryptocurrency up by 250 percent.
The former Copy-Cat became a company that plays a role in all important markets. Further growth is very likely. The only notable adversary is in his own country. The Chinese government does not want its own companies to become too powerful, as was recently seen at Alibaba. (Alexander Amon, February 28, 2021)
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