By Aakash Malpekar and Ankit Arora, PGDRM Batch Jan’21-22

SHENZHEN, CHINA – 2020/10/06: Chinese multinational technology conglomerate holding company Tencent logo seen at its global headquarters in Shenzhen. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)

​About the company:

• Company name: Tencent Holding Limited​
• Founders: Pony Ma, Zhang Zhidong, Xu Chenye, Chen Yidan, and Zeng Liqing ​
• Founded: 11 November 1998​
• Headquarters: Shenzhen, China​
• Employees: 85,858 (As of 2020)​
• Revenue: $ 73.56 Billion (As of 2020)

Product Portfolio

Social Media and Messaging products

• QQ: QQ is an instant messaging platform for Personal computers and mobile. In 2018, the number of QQ Monthly active users was around 807 million. ​
• Weixin/Wechat: Weixin/Wechat was launched in 2011. By the end of 2018, the number of Weixin/Wechat Monthly Active users had climbed to around 1 billion.​
• Qzone: Qzone was created in 2005 and is the largest social networking platform in China. The number of monthly Active users of Qzone in 2017 was around 563 million.​

Payment Apps

• Tenpay: Tenpay by Tencent is the second-largest online payment platform in China.​
• QQ wallet: QQ wallet is a mobile payment product by Tencent that integrates several payment options like bank card payment, QR code payment and NFC payment.​

Games

• Tencent is the largest video games publisher in the world. It has a stake in the two most popular Battle Royale-style games: Fortnite and PlayerUnknown’s Battlegrounds (PubG)​

Music and Movies

• It also invests in Western music and films.​
• Tencent has recently completed a deal giving it a 10% stake in Universal Music. In addition, Tencent already has its own music division – Tencent Music Entertainment (TME).

Cloud Services​

• In 2013, Tencent launched Tencent Cloud. Since then, it has gathered over one billion paying customers.​

TENCENT HOLDINGS INVESTMENTS IN INDIAN STARTUPS​

Tencent has invested more than $2 billion in Indian start-ups. ​

BUSINESS RISKS​

• Cyber Security Risk​

Since Tencent provides all its services on the digital platform, it is very important to secure the personal data (like credit card details) of people from hackers. Hence it’s important for them to maintain a robust cybersecurity system.​

Also, since Tencent operates in such a dynamic industry, it’s very important for them to maintain the relevant IT infrastructure to be ahead of its competitors.​​

• Operation risks​

This might involve a main server outage caused by technical problems or releasing an application or software with lots of bugs (usually due to coding errors).  ​​

• Geopolitical risk​

Considering the current Covid-19 fiasco, China as a nation has felt the heat from all the nations. Ultimately, Chinese businesses have suffered due to the ongoing anti-china sentiment all over the world. ​

• Competition Risk​

As the internet era is booming globally, there is an exponential increase in the competition that Tencent is facing. Example. It faces competition from several big players like EA Games, Facebook, Google, etc. ​

• Legal and Compliance Risk​

Tencent provides its services through various platforms and operates in diverse countries. Considering that the regulatory and legal requirements vary in each nation, there is always a risk of violating the ever-evolving norms.​

• Concentration Risk​

As per reports, 53% of the revenue of Tencent comes from its value-added services. Tencent’s VAS comprises two sub-segments – Gaming and Social Network. Hence if in future these VAS are banned due to some reason, this could impact Tencent’s revenue to a great extent. 

Read the full research study here: Risks for Tencent by Aakash Malpekar and Ankit Arora​