Whatever Tencent’s future plans, its recent loan acquisitions demonstrate that the company still has strong financial support.
Tencent Holdings Ltd. has raised a staggering US$8.3 billion in loans.
The tech company is one of China’s biggest, along with its competitor, Alibaba Group Holding Limited.
The founder of Tencent, Pony Ma, is known for keeping a lower public than his Alibaba counterpart, Jack Ma. That might be a good thing, in light of the recent fallout that resulted after Jack Ma openly criticized the Chinese government.
What is Tencent?
Tencent was co-founded in 1998 by Ma Huateng (better known as Pony Ma) and four friends. In 1999, the company launched its first product, a free PC-based instant messaging service that served as the foundation of what would eventually become WeChat.
While their messaging service gained one million users within its first year, Tencent remained unprofitable. The company’s first profits came following the launch of its messaging platform for mobile phones in 2001 and, within three years, Tencent was listed on the Hong Kong Stock Exchange.
In January 2021, Pony Ma became the second richest person in China with a net worth of US$59.9 billion. Ma currently trails only businessman Zhong Shanshan, who has a current net worth of US$67.3 billion. Zhong founded a bottled water company in Hangzhou, which later became Nongfu Spring. In January 2021, he owned 84.4% of the company and was its chairperson.
Unlike his colorful and expressive rival at Alibaba, Pony Ma is largely reserved and prefers to maintain secrecy regarding his personal life.
Primarily known for the web-messaging application WeChat, Tencent is a technical juggernaut that has invested in various ventures across social media, video gaming, movies, comic books and more.
With Millennials and Gen Z representing its target audience, Tencent has various holdings. The tech conglomerate holds full ownership of Riot Games (League of Legends, Valorant) and a 40% holding in Epic Games (Fortnite, Gears of War). Tencent has also invested in various social media platforms including Reddit and Snapchat. The company also has minority stakes in electric carmaker Tesla and music-streaming service Spotify.
As of March 2021, Tencent has a massive market cap of US$866 billion. Currently, there are only four companies with a trillion-dollar market cap including Amazon.com, Inc., Microsoft Corporation, Apple Inc. and Alphabet Inc The company shows no indication of slowing down in its attempt at becoming potentially the fifth company to reach a trillion-dollar market cap.
Tencent and Alibaba have often been at odds with each other. The power these two companies wield was put on display in 2018 when the Financial Times reported that the firms were requiring investment banks to pick which of the two they wanted to invest in and commit to not funding the other.
Banks have demonstrated that they are willing to go along with these demands, indicating just how completely Tencent and Alibaba control the Chinese tech market. In the process, they have managed to reshape the investment landscape to suit the terms of their rivalry.
Tencent and censorship
Tencent has been criticized for censorship practices within the United States and has come under scrutiny over how it shares WeChat users’ data.
In an interview with Win.gg, Freedom House senior research analyst and China Media Bulletin director Sarah Cook offered the following comment regarding Tencent and their censorship practices:
“Within China, just like any other Chinese technology company, Tencent is required and actually works very hard to enforce the surveillance and censorship apparatus that the Chinese government’s Communist Party impose on information, and that’s very wide-ranging.”
The US has been less receptive to Tencent’s censorship practices. Toward the end of his term in January 2021, former President Donald Trump signed an executive order banning eight Chinese software applications, including WeChat Pay. This was following the Trump administration’s attempted ban of WeChat in August of 2020, though the ban was later repealed in court.
Appeals over the overturning of the bans that had been enacted by the Trump administration have been paused as the Biden administration reviews the information gathered by the previous administration.
Despite the recent issues the company has faced in the US, Tencent remains a global presence. While Tencent’s future plans remain largely unknown, its recent loan acquisitions demonstrate that the company still has strong financial support.
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