100 Great Business Leaders by Jonathan Gifford

Author:Jonathan Gifford
Language: eng
Format: epub
ISBN: 9789814484688
Publisher: Marshall Cavendish International

The ideas

The launch of OICQ required funding. Local banks did not see OICQ’s user base as an asset against which they could lend money. Tencent then sought outside investors, one of whom offered 600,000 yuan (about $72,500) to buy the technology. Ma held out for one million yuan. ‘Fortunately, we failed to reach an agreement,’ said Ma. In late 1999, with the internet industry worldwide booming, Ma found venture capital funding: $1.1 million from IDG Ventures, one of the first Western investment firms in China, and another $1.1 million from Hong Kong-based PCCW.

In 2000, OICQ was renamed QQ. The company faced competition from Microsoft’s Mandarin version of its popular MSN Messenger service, and from other major China internet players, such as the successful portals Sina.com and Sohu.com and the e-business group Alibaba.

Tencent launched its own portal, QQ.com, and began to sell virtual goods to its burgeoning user base – especially customised avatars for customers to use as their instant messaging personas. Ad revenues and virtual goods sales began to take off. In June 2004, the company launched on the Hong Kong Stock Exchange, raising $200 million. ‘This is just the beginning,’ said Ma. He was right.

In 2005, Tencent began to generate revenues from its QQ Mobile service. Its cute scarf-wearing, winking Penguin logo became so popular that it began to earn money through licensing.

The company moved into online games, initially with chess and card games but soon licensing and adapting South Korean-developed games such as Cross Fire and Dungeon & Fighter, promoting the games via its still-growing QQ user base (up to ten million peak simultaneous users by 2005).

Tencent moved into other internet platforms: a social networking site, QZone; a consumer-to-consumer auction site, PaiPai; on online payment system, TenPay. The company originally partnered with Google for its search engine, but also began developing its own; in 2005 Tencent switched to its own search engine, SOSO, soon also switching to its own advertising platform and mobile platform. The company had made the right call: Google pulled out of China in 2010.

In 2007, Tencent invested over 100 million yuan (c. $13 million in 2007) in a major internet research facility, China’s first. In 2010, the company launched a Twitter-like service called Tencent Weibo (‘microblog’ in Mandarin) in competition with Sina Weibo.

Tencent is now one of the world’s major internet companies. Its dominant position in China has brought it into conflict with other internet operations. In a 2010 interview with Corporation magazine, Ma was asked to comment on the perception that Tencent’s huge user base made the company too powerful. ‘What are we suppose to do about that?’ replied Ma. ‘Our users like our product. There’s nothing we can do about it.’

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