Tencent is China’s biggest Internet company and the operator of ‘WeChat’, the most popular mobile instant messaging service in China. With mobile games, messaging service and advertising revenues driving its growth, the Shenzen-based Tencent has become the most valuable internet company in Asia with a market cap of $159 billion, not far behind Facebook’s $190 billion and much ahead of Twitter’s $25.4 billion. Tencent’s WeChat and QQ instant messaging apps together have a user base of over 1 billion and the day doesn’t seem far when the company will overtake Facebook. Of course, Tencent has the advantage of being based in a country having the world’s highest population.
The CEO of Tencent is Ma Huateng, also known as Pony Ma. The company provides a large number of services including social networks, online games, web portals, e-commerce and the instant messaging services Tencent QQ and WeChat. As of April 2014, Tencent was the world’s fourth largest internet company after Google, Amazon and Ebay.
Tencent went mobile much before Facebook and its mobile platform offers multiple functionality which equals that of Facebook, WhatsApp, Twitter and Zynga all rolled into one. It also provides taxi finding service through GPS similar to Uber, which is also very popular. Tencent’s mobile services have over 355 million active users.
Tencent was founded in 1998 and its first product was instant messaging service called QICQ, the name of which was later changed to QQ. Tencent QQ became a hit among the youth as it offered instant communication with each other. So in a way, Tencent provided a social networking platform even before Facebook came on the scene.
Tencent initially earned revenues from fees charged to its QQ premium accounts and from advertising. The company went public in 2004 and is listed in Hong Kong. Tencent then entered into online gaming, value-added mobile services and licensing of its penguin logo character to snack foods and clothing companies. It then expanded to selling virtual goods.
When the mobile market rose, Tencent shifted its gaming operations to smartphones and became China’s biggest gaming company. In 2011, the company launched Weixin, an app for text messaging and group chatting. The company has regularly added new functions to the app including ‘shake your phone and see who is nearby’, walkie-talkie, voice-to-message free talking service and e-finance. Tencent is also introducing a game like the hugely popular Candy Crush Saga on its QQ and Weixin platforms.
Tencent has posted a net profit of 5.84 billion Yuan (about $949 million) for the second quarter ended June 2014, a whopping 59% rise over net profit of 5.51 billion Yuan earned during the same period last year. The company’s revenues rose by 37% to 19.74 billion Yuan in the second quarter beating analysts’ expectations.
Tencent now has ambitious plans to expand beyond China into the international markets. It has already reached Southeast Asian countries and India. In 2012, Tencent started WeChat, an international English version of Weixin and launched it in Southeast Asia where it became very popular. In 2013, WeChat became the 2nd most downloaded app in India. Overseas user base of WeChat has already reached 100 million. Tencent has appointed popular celebrities like LeBron James, Lionell Messi and upcoming Indian actors Parineeti Chopra and Varun Dhawan as its brand ambassadors.
However, other countries are a little wary of dealing with Chinese companies due to the Chinese Government’s tight hold on everything. In the US, WeChat is currently used only by the Chinese people to chat with their friends and family in China.
Tencent is busy investing and buying stakes in startups and other businesses internationally, trying to spread its tentacles worldwide. It is also buying stakes in Chinese e-commerce websites and giving a tough competition to Alibaba. The Chinese Hangzhou-based Alibaba is also buying and expanding, and the two giants are overlapping each other’s territories leading to a tech war between them.