Cambridge Business Association
Is Tencent's Rapid Growth Starting to Plateau?
Article

Is Tencent's Rapid Growth Starting to Plateau?

Fang Jianchun
Huxiu, 2019
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7

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  • Analytical
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Recommendation

Numerous media outlets have credited Tencent as one of the world’s most innovative companies. The company’s development awes observers and serves as a case study for internet entrepeneurs in China. However, can Tencent keep up this pace of development? In this article, Fang Jianchun, writing for financial news platform HKCJ2016, addresses the crucial question: Is Tencent’s extraordinary growth starting to level off? He thoroughly examines Tencent’s 2018 fianancial performance and analyzes the company’s business ventures section by section. This well-organized report will be helpful for anyone interested in Tencent and who wants to learn more about China’s gaming and advertising market. 

Summary

Although Tencent’s revenues and profits in 2018 matched market expectations,Treat video games as brand names (capitalize, roman, no quotation marks) shareholders in the United States and Hong Kong divested stocks instantly after Tencent published its annual report. This was likely a reaction to a net profit drop that Tencent reported for the fourth quarter, which caused concerns that the company’s growth was slowing even though increased investments had caused the dip. And yet it sparked the question: How solid are Tencent’s main business divisions and how profitable are they going to be in the future?

Tencent Games has always been the main business and an unfailing source of profits for the company. In 2018, revenue from games came to ¥77.8 billion ($11.2 billion). But since 2016, the Chinese government’s tightening rein on the gaming sector has stunted the growth of many gaming enterprises. Tencent still hasn’t been able to cash in on its latest game, PlayerUnknown’s Battlegrounds, because regulatory authorities haven’t issued a version number to...

About the Author

Fang Jianchun is a writer for the WeChat account HKCJ2016, a leading Chinese financial news platform that focuses on presenting and interpreting even subtle changes in China’s policies and markets.

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