It’s been a dramatic two years for the once-dominant Chinese internet and investment firms Tencent and Alibaba. Both were on their way to a $1 trillion market value and were constantly pushing into new businesses. The Chinese communist leaders wanted it differently.
Alibaba’s stock price and market value fell nearly 80% between October 2020 and the same month last year. Tencent fared slightly better, down 65% over the period. Now it has turned around. Tencent’s stock price has nearly doubled in less than three months, and now growth is being crowded out.
Pony Ma, CEO of Tencent, lashed out at employees of various departments in his New Year’s speech, which was leaked on China’s social media.
– They can’t even survive as separate business entities, but still relax and play on weekends. Is it possible for us to ask something? Yes, it certainly is if there are no results, Ma said in the 10-minute speech.
According to the Jiemian news service, which first mentioned the video, it said corruption among employees and a lack of culture had been documented in 2022.
“I want employees to think like entrepreneurs and see Tencent as a startup, with pressure to start my own business,” Ma said.
Tencent enjoyed consistently high growth for more than 20 years until it came to an abrupt halt in 2022 with declining revenue.
Tencent and Alibaba adopted the “996” work culture, which worked from 9 a.m. to 9 p.m. – six days a week for many years. The 72-hour week is more than 25 hours longer than permitted under Chinese labor protection law.
– Don’t laugh at others who say the cloud service has been overtaken by Huawei. You’re like the third child in the family, nothing to do with it, he said, urging the business to grow.
– How big can we get. What can you do to make us bigger, the Tencent boss asked the employees.
He also said that employees shouldn’t care what other people think.
– It does not matter. We’re in no hurry. Don’t be silly, Tony Ma said, according to Jemian Leaks.
Threatened by Tiktok
Bytedance and the company’s video apps, Tiktok and Douyin, are threatening Tencent, which has failed to export the concept despite having more than a billion users on China’s super app WeChat. The company is still one of the largest gaming companies in the world, but most of it comes from China.
The combination of streaming services and online shopping, where products are showcased live, picked up steam during the China shutdown, and Tencent’s service grew 800% over the past year. It is the Chinese application Tiktok Douyin that dominates this market in China.
According to trade website The Information, Chinese consumers left 1.41 trillion yuan (2.08 trillion kroner) of trade on Douyin, a 76% growth from 2021.
– The worst is over
Similar services are currently being rolled out to international markets on Tiktok, also owned by Chinese company Bytedance. Tiktok Shop was launched in the US just before the New Year, in Southeast Asia direct sales via Tiktok quadrupled to around NOK 50 billion in 2022.
This is a market Tencent cannot lose. At Tuesday’s annual WeChat conference, it was no secret that Tencent has renewed ambitions to take market share from challengers. Tiktok is the biggest threat.
Tencent tested its own video app as part of super app WeChat. The concept is the same as Tiktok: using artificial intelligence and algorithms to feed users with endless short video clips. Algorithm impressions are up 400% in the last year.
– Tencent may have stabilized in the fourth quarter, but revenue growth won’t come until 2023. Video will be the key to Tencent’s growth going forward, analytics manager Shawn Yang of investment bank Blue Lotus Group tells the South China Morning Post.
Analysts are eagerly awaiting the start of the earnings season to see if China’s big tech companies have managed to reverse two years of weak growth in their former key areas.
– The worst is over, writes analyst Qin Zue of brokerage firm Zhongtai International in a report.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We want you to share our cases through links that lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or within the framework of the legal provisions. You can find more terms here.