Tencent announces reorganisation – focuses on ‘industrial’ internet
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Tencent announces reorganisation – focuses on ‘industrial’ internet

Tencent, one third of the powerful BAT triumvirate that rules the Chinese internet (the other two, respectively, are Baidu and Alibaba), has announced a reorganisation that points to where the company sees further growth coming from. The news comes as Tencent faces a number of challenges – from increased (and globally unprecedented) oversight of video games from the Chinese government to the ramifications of the current U.S./China trade war – that have weighed on its share price. However, despite its difficult year on the stock market, Tencent is still a giant with a thriving business.

graph 0310 tencent

Tim Culpan, a Bloomberg Technology columnist who predicted some of Tencent’s current difficulties, says that this reorganisation is good news. One of the changes he believes is “surely overdue” is the combination of three of Tencent’s existing units (social networks, mobile internet, and online media) into one. He writes: “this appears to nod to the fact that, with WeChat at the core of much of its business, the line between various content channels such as news, video and payments is being blurred.”

Almost a year ago, according to Tencent and WeChat consultant Matthew Brennan, the company shifted its focus further towards the B2B world. There are signs of that continuing, as Tencent has announced that the “cloud and smart industries” group will include services in the areas of healthcare, education, and security, as well as other location-based stuff. Perhaps most interestingly, though, Tencent has announced that it feels the time is right to upgrade from a “consumer” internet to an “industrial” internet.

The ways in which this might be achieved remain to be seen, but, as Culpan notes: “If Tencent truly believes it is facing a change from consumer to industrial internet, it will have to show it can go beyond the one billion users it has today and focus on the ten billion machines it can connect in the future.”

Disclosure

Dominion holds Tencent in its Global Trends Ecommerce Fund


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