Plans to Conquer: Chinese Internet Giant Tencent Targets Silicon Valley
Tencent is the Chinese Internet giant to rival Silicon Valley's titans. It not only owns China's most-used internet portal, but is the fifth biggest publicly traded internet company in the world on a revenue basis, behind Amazon, Google, eBay and Facebook.
Its most well known property in the West is probably WeChat, which is the most-used mobile app in China with more than 468 million users worldwide. The company's ascendancy since it first listed on the Hong Kong Stock Exchange in 2004 has also been driven by a diverse mix of other products, services and subsidiaries such as games portal QQ Games, search engine SOSO, micro blogging service Tencent Weibo and the TenPay online payment system.
Despite its gargantuan proportions, Tencent usually receives only moderate press coverage in the West. But the company is increasingly forging ties with Western brands, such as Burberry, Nike and the BBC, as Tencent looks to international shores to fuel its growth outside its native China.
Business Insider got the chance to throw some questions at SY Lau, the senior executive vice president of Tencent and president of its online media group, about what 2015 will look like for the company and what founding beliefs have set Tencent up for success.
“I think there is an awareness of Tencent, but not the understanding outside those that we work with. The number of Western brands that choose to partner with us around their international marketing and business expansions in China is great, companies like Burberry, Nike and Intel have chosen Tencent as their partner for social and mobile marketing.
“Where we see more opportunity is due to the growth of mobile Internet access across China. Tencent provides a portal for companies to reach and interact with their audiences. The biggest challenge in China has always been the size of the country, and traditional marketing approaches were beyond the reach of those businesses that are in rural locations. Today, companies can take advantage of online and mobile services to market themselves in smarter ways.
“This is not just marketing itself. I presented recently on how tea-producing companies in the Fujian region are now able to sell what they produce on a national or a global level, rather than just local. The impact of this was huge – the per capita income for the region went up. According to figures from the National Bureau of Statistics in China, one village took its per capita income up to 13,800 RMB. Compared to the national average of 8,896, this is a big increase. It puts the village alongside more affluent urban areas.
“Tencent is also an international company today and we see opportunity around the world, whether this is for our own apps like WeChat or for partnership and investment in Western businesses. I think WeChat is possibly the most recognizable brand for those in the US or UK.
“Tencent supports other famous brands around the world in markets like gaming and social. Companies like, Epic Games and Riot Games are owned by Tencent, while we have our own gaming IP that is successful in China.
Tencent’s business approach is built on the philosophy of Sun Tzu, the great strategist and writer of “The Art of War”: Those who succeed always understand, and make the best use, of any situation.
“The biggest shift here is how companies take advantage of the Internet to equalize supply and demand. Previously, companies would not have access to customers without spending heavily to market themselves. Similarly, customers might find it difficult to get information on what the new trends are that are taking place in the major cities. Now, both sides of the buyer-seller relationship can find it easier to find each other.
“We signed a partnership with BBC Worldwide two years ago to bring famous British brands like Sherlock to China. Now we have more US and UK-based productions companies added to our networks. We are investing in more of our own local content as well. Tencent is the exclusive online partner for a range of local TV brands in China, as well as creating our own programmes”.
