SAEDNEWS: Tencent, one of the world’s largest technology companies, was founded in November 1998 as Tencent Inc. in the Cayman Islands. Today, it dominates social media and many other sectors in the country. In the following, we explore how the company was founded and the areas in which it operates.
According to SaedNews’ Success Service, Tencent Holdings Limited is a Chinese investment holding company with international operations, born in the late 20th century during the rise of the internet. Tencent’s subsidiaries operate across multiple tech sectors, including internet-based products and services, entertainment, artificial intelligence, and more in China and worldwide. Tencent’s headquarters, designed as twin towers, are located in Shenzhen, China, and are known as the “Tencent Coastal Towers.”
Today, the young Chinese brand carries numerous titles: the world’s largest gaming company, one of the most valuable tech brands, one of the largest social media companies, and one of the biggest venture capital investors globally. Tencent’s services include social networks, music, web portals, e-commerce, mobile and online games, internet services, payment solutions, smartphones, and more, with each ranking among the leaders in its field. Famous recipients of Tencent investments include Snapchat, Spotify, Tesla, and Hollywood films and series. Today, Tencent is valued at over $500 billion, becoming the first Asian tech company to reach this level. Alongside high value, it has repeatedly been recognized as a global innovator. Tencent now has over 600 subsidiaries, with new additions daily through its numerous startup investment programs. Together with Baidu and Alibaba (known as the BAT group), Tencent competes fiercely with Silicon Valley giants like Facebook, Amazon, Netflix, and Google (the FANG group).
Founding and Early Years
Tencent was founded in November 1998 as Tencent INC in the Cayman Islands. Alongside Ma Huateng (known as Pony Ma), recognized as the company’s main co-founder, others involved included Zhang Zhidong, Zhou Chenye, Chen Yidan, and Zeng Liqing. The company aimed to enter the tech market and seize the many opportunities offered by the internet, which were booming at the end of the 20th century. By securing venture capital, the young Chinese team entered the tech market, although Tencent did not turn a profit in its first three years.
Tencent’s first product, the messaging service OICQ, launched in February 1999 and soon rebranded as QQ due to a legal dispute with ICQ and its owner AOL. QQ remains one of Tencent’s key products today. The company finally achieved its first major stock sale in 2001, when South Africa’s Naspers became the first major investor, acquiring 46.5% of Tencent shares.
Expansion and Growth
Following its first major investment, Tencent went public in 2004 on the Hong Kong Stock Exchange as Tencent Holding Ltd. At the time, QQ was the company’s primary source of revenue through advertisements and user fees for premium services. By 2005, new monetization methods were introduced, including value-added services and branding opportunities for the QQ penguin logo, which appeared on products like snacks and clothing.
Tencent entered e-commerce in 2005 with PaiPai, a C2C marketplace, and TenPay, an online payment service similar to PayPal. In the late 2000s, Tencent expanded into portals, online games, and blogs. By 2003, QQ’s domain helped attract massive web traffic, quickly surpassing competitors and becoming China’s second most visited website after Baidu.
Online gaming became a key focus in 2003, starting with QQ games. Rapid user growth fueled by QQ’s large user base and extensive advertising helped Tencent surpass competitors like OurGames. By 2007, Tencent had launched multiple games with in-app purchases, driving revenue growth.
In 2005, Tencent entered blogging to compete with Sina and Sohu. It created a blog section for each QQ user, quickly reaching 100 million users and becoming China’s largest blogging platform at the time. Although QQ blogs eventually lost popularity, Tencent leveraged QQ’s success to grow rapidly, becoming China’s largest company and the world’s third largest by market value in 2009, with 600 million active QQ users.
WeChat and Social Media Dominance
In 2011, Tencent launched the social media app Weixin, later rebranded as WeChat. The app quickly attracted millions of users and became a major revenue source for Tencent. Today, WeChat is one of the world’s most important social platforms, with over one billion monthly active users.
encent’s Early Investments
After initial success, Tencent began investing aggressively in technology. Its first major acquisition in gaming was a 92.78% stake in Riot Games for $230 million, makers of League of Legends. Tencent had previously acquired a 22.34% stake in 2008, and by 2015, it owned the remainder of Riot Games. Tencent also invested in Epic Games in 2012, Kingsoft Network Technology in 2013, and Sogou search engine for $448 million. The company also invested in Activision Blizzard during its separation from Vivendi, though it now holds only 4.9% of shares.
In e-commerce, Tencent invested $193.45 million in China South City Holdings in 2014, $400 million in Dianping, and in JD.com, eventually increasing its stake to 17.43%. Tencent attempted to acquire WhatsApp in 2014, but the deal was outbid by Facebook for $19 billion.
Other notable investments included stakes in 58.com, LotSynergy, and Koudai Gouwu between 2014 and 2015.
Recent Investments and Strategic Moves
In 2015, Tencent launched WeBank, China’s first fully online bank, offering diverse financial services including the Weilidai online loan platform integrated with QQ and WeChat. Tencent also continued expanding in gaming, acquiring 84.3% of Supercell for $8.6 billion in 2016. The company established an eSports city in Wuhu in 2017, with plans for another in Chengdu.
Tencent also invested in the automotive sector, buying a 5% stake in Tesla in 2017 for $1.78 billion and collaborating with Future Mobility on electric and autonomous vehicles. The company acquired a 12% stake in Snap Inc. and partnered with LEGO to develop online games and a social network for children.
Tencent also explored cashier-less retail, opening its first store in Shanghai and collaborating with Carrefour in 2018 to integrate its technologies into supply chains and retail. Analysts attribute Tencent’s rapid growth to China’s large market, restrictions on foreign companies, and Tencent’s global expansion, with its stock rising from HK$200 in 2017 to HK$442 in 2018.
Challenges and Failed Projects
Despite its success, Tencent has faced challenges and failures. Early on, it was criticized for copying Western products. Some initiatives, like the Paipai e-commerce platform, SOSO search engine, and social networks Pengyou and Tencent Weibo, failed due to competition, strategy changes, or user preference. Paipai shut down in 2016, SOSO struggled against Baidu, and Tencent Weibo was closed in 2014. Nonetheless, Tencent’s flagship products like QQ and WeChat continue to dominate.
Today, Tencent’s ecosystem reaches over two-thirds of China’s population, with users spending a combined 1.7 billion hours daily on its online services. Pony Ma remains the company’s CEO and chairman while also holding a political role in China’s National People’s Congress.
