Tencent: plenty of room to grow in China, cautious over international expansion
Wondering when you’ll be able to play Honour of Kings in Britain? Or use WeChat in Italy? No? Well, apparently some people are – and they’re very vocal about it. So much so, in fact, that Tencent, the Chinese internet giant behind both of those products and more, has responded to questions over its expansion plans in the near term.
A senior executive told Reuters last Thursday that the company will only take its social networking, music, and gaming platforms overseas if it sees a “gap in the market it can fill.” The statement is a reaction to rumours that Tencent was planning an English-speaking world expansion, following a number of investments in diverse regions and companies.
Tencent’s share price has appreciated by 42% over the past 12 months
SOURCE: Yahoo Finance
Executive vice president Seng Yee Lau said that Tencent had to ask itself whether it could create a user base in different countries before expanding into them, and noted that there was plenty more growth to capitalise on in China before that would become a necessary step. He said:
"People ask, when are we bringing WeChat to different countries. Our answer has always been, for any digital services or products, ... if they have a better way of meeting the needs of the local customers, then they have a basis to be in there. If they haven't figured out a way to be a better alternative then we have no basis of being there."
Tencent has ploughed literally billions of dollars into foreign markets over the last few years. The largest of these investments was an $8.6 billion deal to take control of Finnish mobile games specialist Supercell in 2016. And while Tencent has no plans to push its own products into other markets (currently, anyway, and with one or two exceptions, such as the previously mentioned Honour of Kings), it will continue to buy up foreign properties that it likes the look of. It’s also hoping to cash in by helping firms access the lucrative Chinese market. Lau said:
"Everybody around the world is looking at us to be a gateway into China, we are the infrastructure, so there are more people looking at opportunities to come to China with us than us going out."
Dominion holds Tencent in its Global Trends Ecommerce Fund.
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