Tencent: the biggest web company you’ve never heard of

Something big is happening in the world of web in China. Mike Jennings takes alook at the potential of Tencent.

It's very successful in China... but it's made few attempts to expand beyond its borders.

Tencent runs some of the world's biggest online communities - so why haven't we heard of it? "It's very successful in China", explained Heng, but it's made few attempts to expand beyond its borders and "its presence and knowledge of the market is limited when compared to Google and Yahoo".

Tencent's Chinese origins could harm its chances when it comes to expansion in core areas, too. "Other countries are wary of Chinese games," says Heng, who thinks the firm needs to be "more mindful" when planning any significant expansion.

Global expansion is very much on the cards for Tencent. The firm's president, Martin Lau, said his company will "continue to invest selectively, but forcefully, in e-commerce and search". It's already begun expanding with "acquisitions overseas to better understand the global gaming trend" that will "pave the way for us exploring [other] markets abroad".

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Expanding the expansion

Tencent isn't just expanding in core areas like gaming and social networking. It has also set its sights on new, lucrative parts of the market, including e-commerce and advertising.

Kevin Tam, senior analyst at Core Pacific-Yamaichi Securities in Hong Kong, told Reuters that "[Tencent] is enhancing its development...in order to lower the contribution from web games", and with good reason: the firm's president, Martin Lau, says that currently "90 per cent of our revenue comes from [microtransaction] fees, with 10 per cent from advertising, and there needs to be a shift".

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