The Rise of Tencent: How a Chinese Tech Giant is Shaping the Future

Rate this After Reading the Post post

Part-[2]

Corporate Governance

Tencent
Ma Huateng, also known as Pony Ma, is the main co-founder of Tencent and is currently the conglomerate’s CEO and chairman.

Largest Shareholder
Tencent’s largest shareholder is Prosus (majority-owned by Naspers), which owns 25.6% of all shares and serves as the controlling shareholder. Co-founder Ma Huateng, also known as Pony Ma, maintains a significant stake in the company at 7.63%.

Headquarters and Offices
Tencent’s headquarters is located at the Tencent Binhai Mansion, also known as the Tencent Seafront Towers, in Shenzhen’s Nanshan District. In addition to its main headquarters, Tencent has offices in major Chinese cities, including Beijing, Shanghai, Chengdu, and Guangzhou.

Board of Directors
Tencent operates under a unitary board structure. Key members include:

Martin Lau, who helped with the company’s IPO as an investment banker at Goldman Sachs, is currently Tencent’s president.
  • Ma Huateng (Pony Ma): Co-founder, CEO, and Chairman
  • Martin Lau: Executive Director and President of Tencent
  • Jacobus “Koos” Bekker: Non-executive Director (Naspers)
  • Charles Searle: Non-executive Director (Naspers)
  • Li Dongsheng: Independent Non-executive Director
  • Iain Bruce: Independent Non-executive Director
  • Ian Stone: Independent Non-executive Director
  • Yang Siushun: Independent Non-executive Director

The company’s governance is further supported by its Strategy Department (SD), which provides business analytics across its various divisions.

Largest Shareholders
As of early 2024, the largest shareholders in Tencent are:

  1. Prosus (Naspers Limited): 25.6%
  2. Ma Huateng: 7.63%
  3. The Vanguard Group: 2.68%
  4. BlackRock: 2.22%
  5. Norges Bank: 1.11%
  6. Ma Huateng Global Foundation: 1.02%
  7. JP Morgan Asset Management: 0.81%
  8. E Fund Management: 0.79%
  9. Fidelity: 0.71%
  10. Baillie Gifford & Co: 0.63%
  11. Martin Lau: 0.5%

Approximately 44% of Tencent shares are held by the general public, and around 24% are held by various institutions.

Subsidiaries

Tencent has numerous subsidiaries and Wholly Foreign-Owned Enterprises, including:

  1. Tencent Technology (Shenzhen) Co., Ltd.: A software development unit responsible for products such as Tencent Traveler, later versions of QQ IM, and various mobile software applications. This subsidiary is located in the Southern District of Hi-Tech Park, Shenzhen, and holds several patents related to instant messaging and massively multiplayer online games.
  2. Shenzhen Yayue Technology: In 2023, an entity controlled by the state-owned China Internet Investment Fund took a golden share investment in Shenzhen Yayue Technology, which led to a decline in Tencent’s stock price upon the announcement.

Tencent continues to expand its business operations through these subsidiaries, solidifying its presence in various technological and entertainment sectors.

Research

Tencent Research Institute
In 2007, Tencent invested over RMB 100 million to establish the Tencent Research Institute, marking the creation of China’s first research center dedicated to core Internet technologies. The institute has campuses in Beijing, Shanghai, and Shenzhen, focusing on cutting-edge technological advancements and innovations.

AI Joint Lab for Pandemic Research
In 2020, amid the COVID-19 pandemic, Tencent established an AI Joint Lab in collaboration with renowned respiratory disease expert Zhong Nanshan. This lab focuses on research related to disease screening, prevention, and outbreak warnings, contributing to global efforts in combating pandemics and improving public health responses.

Hunyuan Large Language Model
In 2023, Tencent debuted its large language model, Hunyuan, designed for enterprise use. This model represents Tencent’s significant advancements in artificial intelligence and its applications across various industries.

Digital Seed Bank Collaboration
Also in 2023, Tencent announced a partnership with the Chinese Academy of Agricultural Sciences (CAAS) to establish a Digital Seed Bank at the Tencent Science and Technology Museum. This initiative aims to leverage digital technologies to enhance agricultural research and seed preservation, supporting sustainable agricultural development.

Through these initiatives, Tencent continues to demonstrate its commitment to research and innovation across multiple domains, contributing to technological advancements and addressing global challenges.

Chinese Government Partnerships

The Chinese government regards Tencent as one of its national champion corporations, a status that highlights the company’s significant role in supporting national interests and policies.

Mobile Game for Xi Jinping
In celebration of the 19th National Congress of the Chinese Communist Party, Tencent released a mobile game titled “Clap for Xi Jinping: An Awesome Speech.” Players were given 19 seconds to generate as many claps as possible for the party leader, reflecting a unique blend of political engagement and digital entertainment.

Patriotic Games Collaboration
In August 2019, Tencent collaborated with the Guangdong Propaganda Department of the Chinese Communist Party and the People’s Daily to develop “patriotic games.” These games were designed to foster national pride and support government narratives through interactive digital experiences.

CIA Allegations
A December 2020 article in Foreign Policy reported that a former senior official of the Central Intelligence Agency (CIA) claimed the CIA concluded that Tencent received early funding from the Ministry of State Security. This “seed investment” was purportedly aimed at developing the Great Firewall and monitoring technology. Tencent denied these allegations, maintaining that it did not receive such funding.

Central Bank Digital Currency Development
In 2021, reports indicated that Tencent, along with Ant Group, was collaborating with the People’s Bank of China to develop a central bank digital currency. This initiative aligns with China’s efforts to digitize its currency and enhance financial technology infrastructure.

Influencer Development Plan
In June 2022, Tencent partnered with Shanghai United Media Group to launch a plan focused on developing domestic and foreign influencers. This partnership aims to bolster China’s soft power and digital presence on the global stage by leveraging influencer marketing and digital media strategies.

Environmental

In 2022, Tencent set an ambitious goal to achieve carbon neutrality for the company and its supply chain. This commitment reflects Tencent’s dedication to sustainability and reducing its environmental footprint, aligning with global efforts to combat climate change.

Controversies

Allegations of Copying

Tencent has faced numerous allegations of copying its competitors’ software and services. The company’s founder and chairman, Huateng “Pony” Ma, famously stated, “To copy is not evil.” Wang Zhidong, a former CEO and president of SINA.com, referred to Pony Ma as a “notorious king of copying,” and Jack Ma of Alibaba Group criticized Tencent for a lack of innovation, stating, “All of their products are copies.”

In 1996, the Israeli company Mirabilis released one of the first stand-alone instant messaging clients named ICQ. Three years later, Tencent released OICQ, a version resembling ICQ. After losing a lawsuit against AOL, which bought ICQ in 1998, Tencent rebranded OICQ to QQ in December 2000. With a model of being free to use while charging for personal avatar customization, QQ quickly grew, reaching 50 million users in its second year, 856 million users, and 45.3 million synchronous users by 2008.

Tencent has also been accused of copying various products. For example, QQ Farm was seen as a copy of Happy Farm, QQ Dance originated from Audition Online, and QQ Speed had gameplay similar to Crazyracing Kartrider. In January 2023, Tencent’s MMORPG Tarisland was said to resemble Blizzard’s World of Warcraft.

Tencent’s Acquisitions

Typically, Tencent does not seek controlling stakes in its investments, preferring minority ownership to build connections and acquire technology. In response to criticism for copying, Tencent shifted its strategy to aggressive investments and acquisitions. By 2020, Tencent had invested in over 800 companies globally, including significant stakes in Riot Games, Epic Games, Activision Blizzard, SuperCell, and Bluehole. While these acquisitions benefit Tencent by reducing competition and fostering monopolization, they may stifle growth and innovation in the acquired companies. Colin Huang, founder of Pinduoduo, remarked, “Tencent won’t die when Pinduoduo dies, because it has tens of thousands of sons.”

Security Concerns

In 2015, security testing firms AV-Comparatives, AV-TEST, and Virus Bulletin removed Tencent from their software whitelists. Tencent’s products were found to contain optimizations that artificially boosted benchmark performance while providing more scope for exploits. The settings were also detrimental to end-user protection. Qihoo was similarly accused of cheating, and Tencent was accused of gaming anti-malware tests.

Major Litigation

Since 2018, Tencent has been engaged in litigation with ByteDance. ByteDance accused Tencent of blocking their content and brought several unfair competition lawsuits. As of early 2024, these lawsuits had not been resolved due to jurisdiction disputes. Tencent also sued ByteDance for unauthorized use of WeChat and QQ profiles and illegal data crawling, obtaining an injunction to bar ByteDance from these practices.

Censorship

Tencent’s WeChat platform has been accused of blocking TikTok videos and censoring politically sensitive content. In April 2018, TikTok sued Tencent for spreading false information on WeChat, seeking compensation and an apology. Tencent countersued, alleging defamation by Toutiao and TikTok. Epic Games’ CEO Tim Sweeney, whose company is 40% owned by Tencent, stated that Epic would never censor users’ opinions.

In October 2019, Tencent stopped broadcasting Houston Rockets NBA games in China following a tweet by the Rockets’ GM, Daryl Morey, supporting Hong Kong protesters. In December 2019, the Chinese government ordered Tencent to improve user data rules for its apps. In January 2021, a class action lawsuit was filed in California against Tencent for user censorship and surveillance via WeChat. In November 2022, Sustainalytics downgraded Tencent to “non-compliant” with the UN Global Compact principles due to its complicity in censorship.

2020 U.S. Executive Order on WeChat

On August 6, 2020, President Donald Trump signed an executive order targeting WeChat, banning transactions involving the app with Tencent. Unlike ByteDance, which had potential buyers like Microsoft, there were no immediate buyers for Tencent’s WeChat in the U.S. This executive order did not affect Tencent’s other investments in American companies, such as its stakes in video game companies.

Ayush Anand

Hi Friends, I am the Admin of this Website. My name is Ayush Anand. If you have any quarries about my any post so Leave the comment below.

Leave a Comment