Tencent and Alibaba: Tech Names to Know

The Chinese National Flag

The market beyond the U.S. and Europe can remain obscure entities to those of us new to the tech and mobile scene, especially with the likes of Google and Facebook looming large, but there are some giants swimming in the waters; giants that can give Google and Facebook pause. Two of the largest and less known are Tencent and Alibaba.

Tencent Holdings was recently proclaimed the “undisputed ruler of Hong Kong stocks” by Sofia Horta E Costa in a May 22nd article at Bloomberg Technology. Tencent accounts for 16% of the Hang Seng Index’s market cap. Google’s parent company, Alphabet, commands a similar percentage within the Nasdaq index. Facebook, though, stands at about 2.5% of the Nasdaq market cap, which is a better comparison with Tencent’s focus on social media and online gaming, both tied in with the vitality of mobile. Tencent’s WeChat app reportedly has 938 million monthly active users (Lee). Facebook’s Messenger App crossed over 1.2 billion users this spring in April (Chaykowski).

Tencent's Corporate Website

Tencent holds a market cap on the Hang Seng Index comparable to Google.

Tencent has been steadily growing beyond its Chinese home market. While acquiring international assets like Finnish Supercell (an online game developer) and investments like a 1.8 billion stake in Tesla (of Elon Musk fame), Tencent’s push into Europe’s messenger market fizzled (“China’s Internet Giants”).

Alibaba is probably known glancingly here in America for its online marketplace (and cheap knock-offs), but they control a monstrous amount of the online commerce in China and East Asia; more daily transactions than Amazon and eBay combined happen under Alibaba’s umbrella (Costa). Alibaba has been aggressively expanding beyond its home market by acquiring East Asian e-commerce platforms and taking on a leadership role in creating a “digital free-trade zone” beginning in Malaysia per an article in The Economist (“China’s Internet Giants”). Alibaba’s Ant Financial positions them for a strong presence in international banking and finance instruments.

Alibaba Group's Corporate Site

Alibaba already does more business than Amazon and eBay–combined.

But if both of these companies really are giants, should we not have heard of them by now—even us lay people? It would be a mistake to brush them off because of low exposure here currently. Even with sometimes faltering steps in becoming more present internationally, they are contenders with resources (read: a growing intelligence base and capital) to throw around in brushing up against our more well-known Facebook and Google. More importantly, their domestic markets are huge and growing, which can give them more and more of those resources; but more abstractly, such enormous markets and their presences within them equate to influence. Just as Google and Facebook have changed our culture, Tencent and Alibaba will be (and are) in a position to set the culture both in China, where Google and Facebook and every American company lusts to penetrate, and, broadly, the globe by shear mass, which more directly affects you and me. You are going to recognize Tencent and Alibaba soon.

 

www.forbes.com/sites/kathleenchaykowski/2017/04/12/facebook-messenger-passes-1-2-billion-users/#675d09751330

www.economist.com/news/business/21721203-tencent-leading-acquisition-spree-alibaba-close-second-chinas-internet-giants-go

www.bloomberg.com/news/articles/2017-05-22/hong-kong-s-stock-fortunes-are-tied-to-tencent-like-never-before

technode.com/2017/05/18/tencent-reports-58-profit-surge-on-strong-q1-driven-by-wechat-and-gaming/ 

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