Tencent: Expanding from China to the World

Abstract

China, an internet walled garden, has offered opportunities to its home-bred companies to thrive. These local internet companies, which earned their initial success mostly by cloning their Western counterparts in fulfilling the needs of the country’s demanding internet users, are insulated from the rest of the virtual world. Among these local internet companies, Tencent is the most successful one. A listed company on the Hong Kong Stock Exchange since 2004, Tencent’s 2011 annual report recorded revenue of RMB25.8 billion with an almost 40% profit margin. Its 845 million active user accounts have wide penetration to the 538 million internet users and 1.05 billion mobile users. After achieving sustainable success in China’s internet market, Tencent has its eyes on the world. But as a company nurtured by the walled-garden environment, how can it make its way outside of its comfort zone? What does it have to offer to the global market, with its pockets of look-alike internet services, that the rest of the world is not deprived of? Will Tencent be able to globalise?