What is Tencent? Tencent is so colossally huge thanks to China’s grand political ambitions.
This one, Brandz, considers financial factors — such as how much revenue a company generates,
as well as subjective measures, like awareness and opinion surveys of the general, consumer public.
Last year’s rankings, for example, went pretty much as you’d expect.
What Is Tencent?
At the top are Amazon, Apple, Microsoft, and Google.
Below them are other iconic, global brands like Disney, Starbucks, and Netflix.
But a few, in particular, stand out.
While they’ve scored very highly precisely for their popularity, strangely, there’s a very good chance you’ve never heard of them.
One such company is Tencent — whose Twitter account has a measly 23,000 followers.
Visa, meanwhile, despite being a credit card company, has 383,000. Mastercard has 480,000.
Of course, “Number of Twitter followers” is by no means a complete or accurate picture of a company’s popularity, but that’s exactly the point: Tencent is one of the world’s most recognizable brands, and yet most of the world doesn’t even know what it is.
Such is the insularity of the Chinese market.
There are, however, many good reasons to become familiar.
At the highest level, Tencent is one of the three Chinese internet giants — along with Baidu and Alibaba — together abbreviated as “BAT”.
Headquartered in an unusually-shaped building in Shenzhen, across the border from Hong Kong,
the company exists in a Chinese mirror-image of Silicon Valley — with arduous work hours, an intense culture of competition, and a reputation for doing the unconventional.
Tencent was founded, most famously, by “Pony” — his Chinese name — Mahuateng, whose first major success was “QQ” — a social network which took off in early-internet China.
In many ways, Ma, and Tencent were simply in “the right place at the right time”.
But two of its ideas stand out, if not for their originality, certainly for their early application.
Firstly, rather than rely on advertising for the majority of its revenue, QQ helped pioneer “Value Added Services”.
Users could purchase virtual “goods” like customizable avatars, gifts, and status symbols.
Secondly, with each subsequent product, Tencent never truly started from scratch.
It would carry its enormous and ever-growing user base from one venture to the next until it had near monopoly-level control over the world’s largest market.
In 2011, it launched what became its most popular app ever: the chat application known in English as WeChat, which integrated with QQ.
Its momentum grew dramatically with the introduction of the now-ubiquitous WeChat Pay and Mini Programs, which allows users to install other apps within the app — bypassing the App Store and iOS’ rules — which Apple conveniently turns a blind eye to.
Today, WeChat is called a “super-app” or the “operating system of China” because of its ability to do everything from act as a wallet, pay rent, shop online, and much much more.
Its over 1.2 billion users spend 4 hours a day in the app, on average in China.
That’s more than American users spend on all social media, combined.
With WeChat, Tencent is like Amazon in that it acts as a gatekeeper of the market-setting prices, copying and killing competitors, and effectively taxing all other companies.
When foreign firms enter China, they inevitably partner with Tencent or die of obscurity.
And yet the app is only a relatively small part of the Tencent business empire.
Its seven divisions each compare favorably, if not embarrass, entire other companies.
For example, its payment services division is almost as large as Paypal.
It’s subscription revenue closely follows that of Netflix.
And it makes more from games than Sony or Nintendo.
Outside of China, Tencent holds a vast collection of investments, including Tesla, Snap, and
Epic Games — the maker of Fortnite and the Unreal Engine.
It also wholly owns Riot Games, the parent of League of Legends.
Tencent’s game store, called WeGame, is significantly bigger than Steam, its American competitor.
You could say that Tencent is not a games company, but it is the world’s largest game company.
That is also one of its most long-standing criticisms.
That somewhere along the evolution from chat application to internet technology social network, game, payment service platform, the company lost its soul.
Some argue it lacks a singular drive, motivation, or focus, and is more akin to a boring old investment fund.
Tencent is a part-owner of so many hundreds of companies, you’ve almost certainly unknowingly used one of its products.
But you might ask: Why?
Any country with China’s diversity of regions, languages, and cultures, not to mention its sheer size — would seem to predispose it to much competition.
Why is the U.S. home to Facebook, Twitter, Netflix, Discord, Instagram, and YouTube — while China, four times its size, home to effectively one company to rule them all?
The answer is counterintuitive to almost everything most people have been taught about China.
In a word: non-interference.
It’s not exactly true that the Chinese government is overbearing and controlling.
For foreign companies, absolutely.
But in terms of oversight and industry regulation, China has actually given certain companies extraordinary freedom.
The very existence of Alibaba, Baidu, and Tencent prove China’s willingness to tolerate extreme monopolies when it benefits the state.
Broadly speaking, large private Chinese corporations serve three purposes:
Firstly, they elevate the image of Chinese entrepreneurship, and therefore, the “China brand” more generally.
Evidence of its transformation into a “Moderately prosperous society”, in party speak.
Second, the success of domestic companies comes at the expense of foreign ones.
To the very limited extent that Western companies succeed in China, they do so with the express approval and financial benefit of a Chinese counterpart.
This is even legally codified, in the way that foreign firms are required by law to partner with a local one.
Third, finally, and most controversially, global brands provide China with extra-territorial power.
By holding majority or even minor stakes in overseas companies, China can impose its laws and sensibilities on the rest of the world.
When overseas Chinese communities get their news from WeChat, they continue, for example,to be shaped by Chinese narratives, despite living on Australian, Canadian or American soil.
Tencent is so colossally huge thanks to China’s grand political ambitions.
But, now, having accomplished them, the mood is changing.
And no recent event better represents this shift than the cancellation of the Ant Group IPO.
According to reports, Chairman Xi Jinping himself stopped one of the largest Chinese financial firms from going public — sending a clear message that no company, interest, or individual, even the very richest and most influential, is above the law or party.
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