China's Tencent is quietly surrounding US tech giants with Trojan horse investments” This CNBC headline from 2nd December 2017 describes the strategic success of Tencent’s global investments in 2017. A few days earlier, The Independent had also commented on the sudden international awareness of Tencent’s growth: “A company you’ve probably never heard of became bigger than Facebook last week”.
Tencent is the first Chinese company to exceed 500 billion dollars in market cap, taking up the fifth position in the worlds largest companies after Apple, Alphabet (Google), Microsoft and Amazon. The Chinese digital behemoth who is listed on the Hong Kong stock exchange, surpassed Facebook with a market value of 522 billion dollars, three billion more than Zuckerberg’s social empire.
Naturally, this was the indicator that drove attention to “a tech company barely known in the western world”(as the Independent called it), which over the past year has acquired several business in different sectors. It’s not just WeChat (the social digital platform Chinese internet users can’t live without) but also investments on other social channels, music streaming, and of course the company pillars of videogaming, cloud computing and data center services. In Q3 of 2017 Tencent earned $9,8 billion in revenue, with a yearly growth rate of 61%.
On November 9th, Tencent acquired a 12% share of Snapchat, a company widely recognised as a key innovator in western social media with it’s app that allows users to post images that disappear within 24 hours. A similar feature has since been replicated by Facebook and Facebook owned Instagram. Tencent have also aggressively expanded their Cloud storage offering and infrastructure coverage by opening new data centres outside China; in Europe, North America, India and Russia. On December 8th, Spotify, the number one music streaming platform worldwide, and Tencent Music Entertainment Group announced a joint investment, with Spotify holding a minority stake in Tencent and Vice versa.In the summer of 2016 the Finnish producer of video games Supercel was acquired by Tencent for 8,6 billion dollars. Tencent’s WeGame business now dominates the Chinese and international games sectors surpassing household names such as players like Blizzard, Electronic Arts and Sony in sales volume. Tencent has also been recognised by analysts as one of the biggest threats to Apple, who has recently been under close scrutiny of Chinese legislators. Tim Cook, CEO of the Cupertino company has been very clear on how he sees it: “I see Tencent as one one of our greater and better developers”.
As if that weren’t enough, Tencent also has a project in the automotive sector, with a small ownership stake in Electric car company Tesla.
It’s other investments range from platform for medical diagnosis, advertising services and Artificial Intelligence. Yuxin Ren, Chief Operating Officer at Tencent Holdings, declared l “Last year we identified AI as one of our priorities, and we continue treating it as a strategical key point.”