History of Tencent
Since its inception in 1998, Tencent has realized a splendid growth to become one of the largest and most visited portals originating from China. For about ten years, the growth of Tencent has been quite steady due to its operating strategy that is user-oriented. Tencent made the first sale of its stocks in the Hong Kong Stock Exchange on June 16 2004, becoming a public company, Tencent Holding Limited (Tencent 1).
Its value then was as about USD 1billion. It has, however, made an incredible growth to register a value beyond USD 100 billion. This has made it rise even globally, now being ranked after Google and Amazon. The market value for Baidu is half relative to Tencent. The tremendous growth was recorded in the year 2004 when the company’s earnings increased from $186.77 million (1.14 billion Yuan) to $7.19 billion (43.89 billion Yuan), with 158 percent as yearly compound rate of growth.
Compared with other online games firms, Tencent has made bigger steps to take a market share of about 50 percent, notwithstanding the year they started. For example, SNDA, which is a games enterprise, only has a fifth of Tencent’s market share though it entered the market two years earlier than Tencent.
Tencent, being the largest online services provider in China, has an extensive range of products. These varied platforms try to meet the different online needs in the market. Some of the products provided include portal for various information, e-business platforms, online games, and instant messaging consisting of WeChat, QQ.com, QQMail, QZone, 3Q.com, QQ.com, SOSO, PaiPai, and Tenpay.
Tencent in the USA
Tencent has also penetrated the global market, especially the U.S. With its office in California, the company seeks for the best talents for its gaming and mobile platforms (Gaudiosi 1). It is reported that Tencent registered about 100,000 WeChat users in the U.S. within a month. Further, the mobile game products have grown significantly.
Tencent acquired 14.6 percent of Glu Mobile Inc., a U.S. mobile game developer. The strategy of acquisition seems to be a game-changer in the U.S. mobile gaming industry. The two companies will collaborate to create games with a global appeal.
Tencent Platforms
This app is used to send messages and make calls without charges. The types of messages and calls the app can do are quite varied. For instance, WeChat sends multimedia messages as well as SMS. To enhance what the user feels, the app has a gallery with stickers. In situations where the message is meant for more than one recipient, a group chat of up to 500 people can be created. The WeChat app can facilitate voice calls as well as video calls.
WeChat is one of the most secure apps. User is able to control what should be in the public domain. As a result of the stringent measures it has taken to enhance security and privacy, WeChat has been awarded TRUSTe certification.
Additionally, WeChat gives its users the platform to meet new friends. “Friend Radar,” “People Nearby,” and “Shake” help users to enhance their social life by meeting people from diverse backgrounds. In the course of their interactions, WeChat users have the opportunity to engage in fun activities like playing WeChat games amongst themselves.
WeChat allows users to interact with other users with different languages globally. To improve consumer satisfaction, the app has a language support system, which enhances translation to 20 localized languages. It also has real-time locators to help users identify the location with those they are communicating with and thus eliminating awkwardness.
It is good to note that WeChat popularity has drastically risen to take dominance in the Chinese market with great potential for global market penetration.
QQMAIL
QQMAIL is the Tencent app for e-mail services. The services provided by the QQmail app are of high standards with instant mail notification. With android gadgets, users can get their mails more easily. Content that can be sent through the QQMAIL app includes photos and files. Users can attach files and, therefore, individuals and firms can use the QQMAIL app to send files.
Users can easily gain access to QQMail apps and subsequently manage their inboxes, group-mail folders, and personal folders.
QQIM (QQinstant messaging app)
In China, the most commonly used instant messaging app is the Tencent QQIM app. Since the QQIM app was brought in to the market in 1999, it has become one of the most popular products. A decade later, which was by 2010, QQIM had about 647.6 million active accounts. At that time, no other online community had registered such success. In some instances, the number of active users could exceed 100 million at any time.
Didi Dache taxi
This app allows taxi drivers to connect with their customers, who are in close proximity. Didi Dache app makes use of GPS signals. A customer scans within the radius of the GPS for the availability of a cab, and a taxi driver using the same app will locate the customer.
The app is quite popular among Chinese taxi drivers and their customers. The monthly taxi booking done by Didi Dache surpasses 21 million. Given its popularity, Didi Dache and Kuaidi Dache merged to create a robust taxi app for smartphone users.
Ten pay
Online payment has gained popularity over time. Consequently, Tencent saw the gap in the Chinese market and came up with Tenpay. The payment platform addresses the needs of over 1 billion Tencent customers. The platform has gained even more popularity due to its state of the art security. Customers have the affirmation that their funds are safe while using the Tenpay product.
Using the Tencent Tenpay, businesses can make payment to other businesses, businesses to customers as well as the customer making payments to other customers for their utilities, including transport and many other utilities.
Tenpay has become one of the leading payment platforms, commanding a market share of more than 190 million by the year 2011.
PaiPai
PaiPai is a Tencent product that makes it possible for sellers and shoppers to interact online. Tenpay, another product of Tencent, enhances the efficiency of PaiPai. Sellers can upload their products such as pictures, their descriptions, and prices on the PaiPai Website. The customers, on the other hand, visit PaiPai looking for products. Most of the transactions are done through PaiPai while payment for the goods and the services is made through Tenpay. Delivery is then done as per the agreement between sellers and buyers.
SOSO
SOSO is a Tencent software system designed to search for information from the World Wide Web. The search engine has a significant number of visitors. In the local market of China, it is ranked number 11 while globally, SOSO was ranked as the 33rd most visited Website by 2013. These rankings show that SOSO is quite a busy search engine.
Tencent games
Tencent has, in the past, made significant improvement in the sale of online games. Most of the downloaded games in China are sourced from Tencent games. The games available are varied, and the Website is often uploaded with new games. In one instant, the game sector was the major source of Tencent’s revenue. Though this has changed with time, the game business still is an integral part of Tencent (Osawa 1).
The Successful Areas of Tencent
Instant Messaging
In the past fiscal years, Tencent has realized significant growth in revenues (37%) and profits (58%). Analysts have majorly attributed these impressive growths to “messaging app WeChat or commonly referred to as Weixin in China, as well as a messaging platform, Q.Q.” (Richter 1).
Currently, the company runs three major messaging or social platforms, which are used by millions of customers. WeChat specifically has been the company’s major platform, which is pitted it against other tech giants such as Alibaba’s apps. Tencent plans to reach even more mobile smartphone users across China (Richter 1). WeChat now has more than 200 million users.
Q.Q. platform has also been a key factor in the success of the company. Tencent focuses on making Q.Q. the most valued and respected app in China (Zhang 2). Through a nationwide branding, Tencent Q.Q. is now a reputable brand. The company offers complementary services under the Q.Q. brand to enhance network flow.
Tencent provides free and paid accounts using Q Coin to attract customers from various segments. Besides, the innovative approach has ensured that Q.Q. can provide features such as music players, background themes, banners, and font size, which users can manipulate to meet their unique preferences.
Q.Q. is now considered an international brand. Q Zone is popular, even among Chinese celebrities. It has been considered as the next-generation multimedia platform.
Overall, instant messaging is the most popular Internet-based app, and Tencent has conquered the Chinese market due to its effective, reliable instant messaging platform. The company’s CEO believes that success will still originate from instant messaging technologies as well as Q Zone. Thus, Tencent strives to meet the needs of real-time customers as well as the needs of non-real customers using various products and services to improve user loyalty.
E-Commerce
Given the competitive e-commerce market in China, Tencent has opted for strategic positioning and partnership for success. For instance, the partnership with JD.com has led to the development of another relatively bigger e-commerce site compared to Alibaba.
For strategic and distribution, Tencent acquired a stake of 9.9 percent in South Sea City Holdings, which provides logistics and warehouse services.
In short, the company is focusing on a wide range of businesses put together to develop a robust e-commerce platform that will be driven by its successful social media and other Internet-based platforms.
Further, Tencent aims to create two diverse experiences through its e-commerce. First, the company would like to create a centralized entry point in which buyers and sellers can find any product, and these points are driven by currently available shopping gateways, including Mobile Q.Q. and Weixin. Thus, JD.Com and Tencent have created a kind of centralized e-commerce model. Second, Tencent also focuses on decentralized e-commerce in which various merchants can develop relationships among themselves or via third parties to allow them to trade directly with consumers.
Further, Tencent and JD.com also went for a strategic partnership with Bitauto to pursue the growth of e-commerce in China. Bitauto provides the automotive industry with Internet content and marketing services. Tencent, Bitauto, and JD.com work together to provide a robust online automotive platform for buyers looking for cars in China.
Online Payment Services
Tencent has been growing its online payment services for its users across China. Consequently, the company focuses on the acquisition. For instance, it acquired a 19.9 percent stake of 58.com located in Beijing, which is just like Craigslist. Tencent expects to drive the growth of its Tenpay, which has continued to expand its customer base.
Today, payment services have shifted to mobile payment platforms. For Tencent, the growth has been impressive because the company has been able to leverage similar, existing infrastructures of its mobile payments to drive two other separate mobile payment platform.
In the recent past, Tencent introduced Weixin Payment and Mobile Q.Q. Wallet. These two online payment solutions rely on the same mobile payment infrastructure. Tencent has recorded significant growth in these solutions. Tencent recognizes that these two payment solutions have different customer bases, but they have been able to deliver strong growth for Tencent online payment services.
In addition, it has been observed that the strategic partnership between JD.com and Tencent aimed at developing mobile and Internet user bases. Consequently, Tencent could leverage JD.com e-commerce solutions to provide superior payment solutions. Tencent solutions would be the most preferred partner for delivering payment for JD.com.
The partnership would drive online solutions for both companies because they are vital strategic alliances in the wider and fastest growing online payment, mobile, and e-commerce sectors in China.
Search Engine
Tencent is also in the business of search engine in China. However, the company’s search engine, SoSo, only commanded about 3.5 percent of the market. It had to compete with Baidu (69%), Qihoo (15%), Sogou (8.9%), and Google (2.1%).
In a strategy to acquire more market share and protect the current customer base, Tencent opted to buy Sogou. As a result, the two companies had agreed to work together in developing, cross-promoting, and integrating their different services and products. At the same time, they will also cooperate in technologies that involve search engines, data sharing, and user experience and insights.
Tencent Internet and mobile social customers will have direct access to Sogou’s major services, such as Sogou Search and Sogou Pinyin.
Information Security
Tencent’s online platforms such as WeChat always face significant threats from hackers, and the company has recognized that online performance and security are not dispensable. Tencent claims the lead with regard to scope, scale, and the population of online service users and, therefore, any form of disruption on its network usually results in massive losses. As such, Tencent faces significant requirements to keep its network safe, secure, and available.
Strategic partnerships with Internet security firms have given Tencent an edge in Information Security. For instance, Tencent opted for Huawei’s anti-DDoS security solution against cases of detected attacks. The company leveraged costs and uninterrupted services while achieving optimal performance and avoid customer complaints (Huawei Technologies 1-4).
In 2010, for instance, Tencent opted for Kaspersky Lab, a company that develops secure content and specializes in Internet threat management. In the agreement, Tencent would utilize Kaspersky’s mobile Anti-Virus solution for its Q.Q. security issues. Tencent and Kasperky focused on enhancing users’ awareness of mobile Internet threats and the need to protect smartphones. As such, they were developing a new security solution for smartphones to enhance mobile security through more advanced, personalized security solutions.
Hence, Tencent works closely with information security firms to develop solutions that are tailored to meet its user needs.
Gaming
Tencent has one of the robust gaming solutions in China. WeChat is the “leading mobile social communications platform in China, with over 400 million active monthly users, and Q.Q. Mobile, which has over 848 million monthly active users, to cross-promote new games with Chinese gamers” (Gaudiosi 1).
The company has crossed to the U.S. through its small office in Palo Alto, California. This office is strategically located in the U.S. to support the gaming business there. The company asserts that it is always searching for innovative developers and ideas that could become dominant in the Chinese gaming industry.
Therefore, the company normally focuses on “new talents, emerging companies, and large or small firms that would like to enter the Chinese mobile and online markets” (Gaudiosi 1). To achieve a significant market share, Tencent has introduced more than 20 titles to account for various genres in the gaming industry, including simulation, action, and puzzle.
Popular games on WeChat and Mobile Q.Q. include the Battle of Sango and the Candy Crush Saga. These games can also be accessed through myapp.com, a similar platform as Google Play, which is not popular in the Chinese gaming industry.
Today, Tencent has turned its attention to tap the vast potential among Western developers. Consequently, it focuses on strategic partnerships with other firms such as E.A. Sports to adapt and launch games associated with FIFA and NBA Live in the Chinese gaming market.
Tencent believes that the success witnessed in China with Mobile Q.Q. And WeChat shows that game developers can explore other opportunities not yet exploited.
A strategic partnership has allowed Tencent to explore other Asian markets, for instance, Korea, where it has partnered with SmileGate to launch CrossFire in China. In addition, the company is working with another mobile game developer, C.J. Games, to customize its products for the local Chinese market.
As a result, today, many global game developers want a partnership with Tencent because most games distributed through the firm’s platforms have gained mass acceptance and top charts in AppStore free for download (Gaudiosi 1).
Furthermore, Tencent offers daily “operational support and a cloud-based hosted service to enable quick, seamless, and reliable game performances across all platforms” (Gaudiosi 1).
Several reasons can be attributed to the success of Tencent in most of its platforms and ventures. First, the company is relying on strong requirements to drive growth. Social chat is popular among individuals and, therefore, the company met social chat needs by providing platforms through the Internet to allow more people to communicate in real-time at relatively lower costs.
Second, Tencent rides on the huge market provided by millions of Chinese users. The distribution patterns and market segmentation have ensured that Tencent can target specific users with impressive results. Third, the promotional methods such as added value services have sustained the growth of the company. Tencent has offered many other services through its Q.Q. tools, including user rights and Icon image, to differentiate itself from the rest.
Fourth, innovation and insistence have led to the company to success. The company was started shortly before the dot.com bubble, but it survived to become one of the leading tech firms in China. Finally, the company has developed several products that support user social relations. Blogs, games, and other mobile-based products, for instance, are based on the Q.Q. business model. As such, users can use all these platforms to interact within the Q.Q. network.
Although the company is considered innovative, it has been able to localize most products to meet the Chinese market. Critics have argued that Tencent is developed on ‘copying’ rather than innovation.
The influence of Tencent for people in different ways
Community, media, Online payment and lifestyle
Q.Q. and the instant messaging platform from Tencent has transformed communities. These tools are so popular that they play vital roles in the day-to-day lives of Chinese. Consequently, Chinese who opt for social communication and other online services have opted for Tencent and its different platforms. In addition, other platforms such as PaiPai, Tenpay, QZone, QQ Games, SoSo, and 3G QQ.com, among others, have created the biggest Chinese community of online users.
Tencent’s social media platforms have changed the way people interact. Tencent media platforms have connected millions in China and the globe and influenced their lifestyles on how they communicate, shop, and interact with one another. These media platforms were not previously found in China. Moreover, social media platforms have grown rapidly.
One major observe trend is that social media influences purchasing decisions in China relative to any other market. It is noted that the Chinese have depended on word of mouth rather than the information available in news media to make their decisions.
Thus, social media platforms have transformed this trend because today, Chinese consumers rely on social media to make purchasing decisions once they hear or see products on social media used by families and friends. These observable trends imply that lifestyles among Chinese Internet users have changed to reflect the rise of technology and mobile platforms, and Tencent is at the center of driving these changes.
Works Cited
Gaudiosi, John. “Tencent is game for global growth.” Fortune. 2014. Web.
Huawei Technologies. Huawei’s Anti-DDoS Solution Assists Tencent to Achieve Secure and Available Internet Services. China: Huawei, 2014. Print.
Osawa, Juro. “Tencent Nears Deal With Chinese Game Video Streaming Platform Douyu TV.” The Wall Street Journal. 2015. Web.
Richter, Felix. Tencent’s Impressive Line Of Messaging + Social Platforms. 2014. Web.
Tencent. About Tencent. 2015. Web.
Zhang, Manning. Tencent Q.Q. n.d. Web.