What would be next challenge of the Chinese internet giant: Tencent?

Anne Zhou
Anne Zhou
Nov 21, 2017 · 3 min read

As one of the Chinese internet giants, the Tencent Holdings Limited has dominated the domestic market in the past several years by providing huge varieties of online services, crossing from entertainment to payment system. Especially, its mobile chat service, WeChat, currently owns over 930 million active users; and most users spend over fours hours on the WeChat every day. There is no doubt that the Tencent has become one of the most valuable companies in the world with surging revenue, stock price and a number of active users.

Main Products of the Tencent Holdings Limited

However, the next challenge for the Tencent should be how to expand and dominate in the global market, which would be one of the greatest challenges of most Chinese companies, for the following stage. Compared to the Tencent, its main competitors: the Facebook and WhatsApp, could take huge advantage in the overseas market, for instance, the large amount of their existing customer bases and their well-developed brand awareness. Facing fierce competition from the global internet giants, the Tencent need to reform their current business strategies and solid its dominant position in China. Specifically, there are three main feasible strategic developments for the Tencent to undertake in the current stage.

  1. To enter the global market, the Tencent needs to invest more in research and development (R & D) of its main products. For example, the Tencent could further enhance the popularity of its PC and mobile games, which contributed largely to its annual profit growth, in both China and overseas market. To eventually introduce its PC and mobile games to more overseas customers, it is significant for Tencent to develop an updated version of its own PC and mobile games in English and other languages.
  2. Furthermore, the Tencent can actually improve the potential connections and synergies between different products in its portfolio, in order to retain its high revenue growth in the future. As one of the examples, the WeChat pay has been utilised to make the payment for the Didi Taxi, which is a Tencent-backed taxi hailing app. In this case, the majority of Chinese customers may choose to use Didi Taxi instead of Uber, as they have already adapted to the use of WeChat pay. As the result, the Didi Taxi eventually won against to the competition from Uber in China. Similarly, the Tencent need to proactively combine its different service to differentiate itself from others in the future competition.
  3. At the same time, it could be effective for the Tencent to build some cross-continental partnerships with other global leading companies. For example, the Tencent and Starbucks just announced to develop a strategic partnership with each other by co-creating new social gifting of the Starbucks coffee on the WeChat in early 2017. After launching this new service, existing customers of the Tencent can use WeChat to instantly gift a Starbucks coffee to their friends or family members. By establishing the partnerships with business giants in other industries, the Tencent could actually differentiate its products through these unique selling points (USPs) in the following competition with other global internet giants.
Partnership between Tencent and Starbucks

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