Depth report

　　

The market value of Tencent broke through the US$500 billion mark on November 20, 2017, becoming the first Chinese technology company to join the ranks of the elite, dominated by American groups, and approaching Facebook's US$522 billion market value.

      This social media group is an appropriate representative of China in the 21st century. The company was founded by a low-key engineer, privately owned in terms of ownership, and its services permeate all aspects of citizen life: chat, eating, payment, games, and music. Of the 980 million users of its WeChat platform, more than half spend more than 90 minutes on the app every day.

      Tencent, which is little known outside of China, can dominate the local market, thanks in part to Beijing's blockade of Facebook. Although its overseas expansion efforts to date have been relatively small (mainly for Chinese tourists visiting hotspots such as Las Vegas), the group has invested in some large US technology companies, including Snap, the parent company of instant messaging company Snapchat, and electric vehicles. Manufacturer Tesla (Tesla).

      In China, Tencent is one of the largest investors, surpassing venture capital companies such as Sequoia. It is estimated that Tencent has supported nearly 500 companies in the past 10 years.

    The continued rise in stock prices has brought wealth to both company executives and investors. According to Forbes estimates, founder and CEO Pony Ma is now worth $46.7 billion. South African media group Naspers now has a market value of US$119 billion, mainly due to its 33% stake in Tencent, although the market value of Naspers is actually lower than the value of its stake in Tencent. Recently, Tencent's stock price has been driven by two highly successful divestiture transactions (in the literature division and the search engine division) and strong earnings in the third quarter of 2017. The company's operating profit in the third quarter of last year jumped 57% year-on-year to 22.75 billion yuan ($3.43 billion), exceeding market expectations.

      The company's success is based on two key engines: games and WeChat. But the core of the group's strategy is to build a technology ecosystem that will gain an increasing share of users' time and money. It often adds features: In the mobile payment field, although Tencent is a latecomer, entering the field 10 years later than Alipay under Alibaba, it quickly established a 37% market share.

      Tencent has also added other financial services, including wealth management, insurance, and loans to consumers and SMEs (this group of borrowers is traditionally unwilling to take care of large state-owned banks).

      At Tencent's recent annual conference for application development partners, Vice President Lin Songtao introduced the company's services for small and medium-sized enterprises. "It's hard to imagine," he said. "This is how we change the world. We are changing the life cycle in various ways." Although Tencent and its industry peers have avoided the data concerns of their American counterparts (Chinese citizens are more familiar with privacy concerns and are less tangled in this regard) , But there are also regulatory conflicts.