Tencent: Matching global growth with corporate purpose

2018 was a tough year for Tencent, with its share price falling by a third due to struggles with regulation, a more competitive market, and fallout from the trade war between the US and China. Only the year before, it was a completely different picture - they had just overtaken Facebook in terms of market capitalisation.

Our 2018 FutureBrand Index showed almost every technology company in the report falling down the rankings. It also highlighted a bumpy couple of years for Tencent and they are one of the tech companies in our study that has a lower brand perception score than its market capitalisation (according to PwC’s Top 100 Companies).

However, the pitfalls of 2018 didn’t halt a buying spree throughout the year that saw Tencent and their tech rival Alibaba make a combined 243 investments. Their portfolio is now double the size of Alibaba and even larger than that of US counterparts Google and Facebook.

Tencent are attempting to reposition their business beyond gaming and towards enterprise and the cloud, particularly through their WeChat platform. They are also building out their social media and payment platforms in order to match their global investment footprint.

Today their shares have reached a six month high, and as the FutureBrand Index showed, the longer term outlook for Tencent seems far more positive, with perception of it moving ahead today and in three years’ time trending upward. This correlates with the fact that nearly half of the companies perceived as ‘companies of the future’ are tech companies.

This year, Tencent has increased its perception of experience measures such as having a great story, delivering consistent experience and having high-quality people. However, questions over its wider purpose remain, in particular around its sustainability credentials, thought leadership, indispensability and, perhaps surprisingly, innovation.

But the future does look bright for them. After all, in China they operate from an incredibly strong base with the largest social media platforms, payment systems, video and music streaming platforms, and they are of course the biggest and most popular video game publisher. They don’t do too badly in online security either.

With China’s economy stabilizing, and an investment strategy geared towards global growth and staying on top of emerging trends, Tencent needs to ensure that their corporate purpose begins to match the experiences they create in order to have the best chance of future success.