Tencent, China’s social networking giant, is expanding its users on a massive scale – and it’s eyeing the U.S. market. Here’s what you need to know.
With a market capitalization recently topping $150 billion, Tencent rivals top U.S. Internet companies such as Facebook, Amazon and Google.
Between its two main services, the QQ desktop-focused website portal, and the mobile chat app WeChat, the company has more than one billion users, comparable to Facebook.
WeChat (Weixin in Chinese), a chat app similar to WhatsApp but loaded with features, is a particular growth area for the company – users of that app alone reached 350 million at the end of 2013, a 121% increase since the year before.
But unlike Facebook, Tencent offers a wide range of services, including:
- Mobile games. The company made more than $100 million in the last quarter of 2013 alone through games played on WeChat.
- Online games. Tencent also owns majority stakes in several traditional massive multiplayer online games, including the popular arena game League of Legends, which is played by approximately 27 million people every day.
- Video. Part of the QQ portal, users can stream (but not upload) videos at v.qq.com.
- Shopping. Moving into the turf of the massive Chinese e-commerce company Alibaba, Tencent recently partnered with its competitor, JD.com, which can facilitate shopping through WeChat.
- Taxi services. Only recently launched, the Tencent-backed taxi service Didi Dache is essentially Uber for Chinese cities, and it attracted 21 million users within weeks of its launch.
- Investment. In another move aimed at Alibaba, Tencent recently also connected WeChat with China Asset Management Corporation, allowing app users to invest their money in a mutual fund.
Copying competitors’ services is actually an essential part of Tencent’s ruthless business tactics – its CEO, Ma Huateng, also known as Pony Ma, famously stated that “[To] copy is not evil.”
But the company is also very forward-looking, investing in and expanding services on its mobile WeChat platform, as opposed to its desktop-based QQ service, which currently has double the users of WeChat.
Its services are accessible through the app, rather than on separate sites, meaning that once a user starts using WeChat, he or she is likely to start using the other services as well.
Coming to the US?
While Tencent already has a ripe market in China’s still-booming economy, it’s also looking to expand its user base abroad.
As of August 2013, the latest number available, WeChat has more than 100 million users outside of China. It’s unknown how many of these users are within the U.S, but the American market is definitely on its radar – it recently attracted $2.5 billion in bond investments.
Tencent also spent more than $200 million on advertising to non-Chinese users last year, including video ads starring LeBron James, soccer player Lionel Messi, and a Mark Zuckerberg-lookalike talking to a therapist:
It’s all part of a campaign to familiarize international users with the company, which so far is not very well known outside of China. It extends to usability, too: Tencent recently announced that users will be able to login into WeChat using their existing Google accounts.
And for a company with a $5 billion war chest, the expansion is a logical move, in which it has much to gain and little to lose – especially since some of its main competitors, like Facebook, Twitter, and YouTube, are all banned in China.