The Chinese company Tencent has recently grown to an even more staggering size. The social media and gaming giant has eclipsed the American tech behemoths Intel, Cisco Systems, and Hewlett-Packard in size. It’s market cap has reached a staggering $150+ billion dollars, and is getting close to overtaking even AT&T at $169 billion. According to Paul Mozur, Tencent’s shares, which are traded on the Hong Kong Stock Exchange, are up more than 25% since the start of the new calender year.
It does not have many users outside of the Chinese market, but that market is so size-able that it has had no trouble growing to its current size rather quickly. I think this fact reinforces what so many of us have been writing about in these posts – China’s market is impossible to ignore and will only continue to attract more and more outside companies to try and break into it. Mozur also notes that a “CLSA report valuing Tencent’s messaging application WeChat at $64 billion, or about three times the amount that Facebook paid for Whatsapp.” It makes sense, then, that Tencent purportedly has the potential to make about $3 per WeChat user while Facebook only makes about $1 per Whatsapp user. Within this context, it will be a good idea to pay attention to Tencent’s growth, as it seems likely to remain a huge player in the internet industry whether or not it expands outside the Chinese market.
source: http://blogs.wsj.com/chinarealtime/2014/03/11/chinas-tencent-is-now-bigger-than-intel/
There are positives and negatives to shutting out much of the business from outside countries in China. Although they are shutting out a lot of economic activity, they are also encouraging the growth of Chinese companies. Tencent is a perfect example of this growth and the growth that Chinese companies are capable of.
This is an interest article. I think there were some posts about how Facebook and Linkedin need to approach Chinese market. However, this post shows that the market is already taken by this Chinese company. This post also tells us that just by making a good business in China can lead to a huge success (and pretty big in size) because of such a huge population. Will it be easy for facebook and linkedin to approach these consumers?
I’ve not checked recent financials, but do Facebook or Tweet or WeChat as applications make money? What is the revenue model of Tencent? In any case, there are language- and market-specific issues in China, including how to work with regulators/censors. The rise of Google and Facebook in the US has blinded us to whether their are geographic and linguistic and business culture limitations to their models, on the revenue if not the software / user interface / regulatory / censorship end of things.