Tencent Holdings, one of the biggest internet companies in China, appears to be drifting out of favor among investors. Its share price has fallen around 20 percent from its peak in January, a signal that the shares may be entering the bear territory.
A recent online article criticized the company for spending too much time seeking deals and investments, rather than developing its own products. Titled “Has Tencent lost its dream?”, the essay went viral on the internet, drawing a lot of responses, including those from top technology executives.
Responding to the article, Tencent president Martin Lau wrote on WeChat: “Tencent is an entity greater than the writer described. Every part of the company plays its role and pursues its goal. Tencent cannot be reduced to a product, a strategy or a person’s will.”
We wished, though, that the response had been more specific and backed by verifiable figures.
Anyway, it’s quite hard to talk about the company’s dream. A dream is something that lacks substance. The company’s efforts and resources will always fall short.
It would probably be better to look at the company’s stated mission and vision. We went to Tencent’s corporate website to understand what it is really trying to achieve. And there it is: it says that it aims to connect people for a greater future.
Over the past decade, Tencent has maintained steady growth under its user-oriented operating strategies.
Tencent’s mission is to become the most respected internet enterprise. The company also claims a steadfast commitment to corporate citizenship: it pursues charitable programs and seeks to promote respectful internet communities on its user platforms.
“With each new product and invention, Tencent strives to embrace philanthropy, expand the internet, and be a model for all corporations who strive to improve our world through technology,” the company says.
Tencent wants to connect people. Now, the company’s dream is like a goal that the company wants to achieve as envisioned by its founders when they started the company.
Tencent kicked off its business by launching the OICQ instant messaging software on the internet. The OICQ is a version of the original ICQ software, which was a big hit among Chinese people.
Then, Tencent became an avid follower of internet trends. It launched the QZone social media network, which was inspired by Facebook. Its game titles are also licensed from game developers overseas, rather than self-developed. In instant messaging, the company launched WeChat, which was modeled after WhatsApp and other mobile applications.
Tencent may be a good adapter or follower when it comes to the latest technologies and applications. But would that make Tencent an innovative and creative company?
By and large, the company has been customizing popular foreign applications and games for local users. It doesn’t have to invest much in research and development. After all, its partners are doing that for Tencent.
Recently, Tencent invested in several offline retailers to expand its network and boost usage of its mobile payments system WeChat Pay. The company is driving change not through innovation but by making the right decisions.
Tencent chairman Ma Huateng said the company would like to be a digital assistant across multiple industries to drive their digital transformation. He said the company’s goal is not to infiltrate every trade and industry but to act as a digital assistant for every trade and industry.
To achieve this goal, Tencent is focusing on three areas: connections, tools and ecology. The Shenzhen-based firm would like to play the role of a connector by providing interfaces for all industries to enter the digital world, while providing a comprehensive toolbox for firms and simultaneously becoming part of a community that builds digital ecosystems.
As such, Tencent is operating a platform for all industries to go digital. Of course, this would involve a lot of research and development to accommodate various technologies into a single platform.
But that may be what Chinese enterprises need to catch up with the digital transformation. Tencent’s dream may be to change the world, but it is doing that by helping other companies and entrepreneurs to achieve their digital dreams. Tencent still deserves a credit for doing that.
Originally published at www.ejinsight.com on May 9, 2018.