Page 48 - Forbes - Asia (September 2018)
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FAB 50 — TENCENT
Wired: Workers setting up Pinduoduo’s new o ce in Shanghai. PDD uses WeChat’s digital payment function to process sales.
Sotbank: he Japanese conglomerate has is getting a boost from the company’s pipeline. Recently, three Tencent-backed
participated in 97 deals with a combined investment in the budget-shopping companies—China’s local-services site
value of $62.5 billion this year, Dealogic service Pinduoduo, or PDD, according to Meituan Dianping, news-aggregation
data shows. Nomura analyst Shi Jialong. he Nasdaq- platform Qutoutiao and electric-car
Tencent is investing to ind products listed PDD operates under a group- maker Nio—iled to go public.
that can help it wring more revenue buying model similar to Groupon’s. But he investment spree, however, isn’t
out if its big user base, says Ken Xu, a PDD bases this on WeChat, allowing its without a downside. Some of the recent
partner at venture capital irm Gobi 3 million active users across the social- initial public oferings have tanked,
Partners, which has invested alongside media platform to form purchase groups suggesting that Tencent’s support by no
the company. It is casting a wide net in and get more discounts. means guarantees success. And there is
sectors such as video game broadcasting, his, in turn, has led to more frequent also concern that Tencent’s free-spend-
inancial services and online shopping. It usage of WeChat’s payment function ing ways are diluting its focus. “he
usually begins with a 10% to 20% stake as users pay for PDD purchases with company has evolved into a sort of VC
in either early-stage startups or more ma- the app. “Many of PDD’s customers are irm, with gaming and social network-
ture outits. he company encourages its in remote areas, and they weren’t very ing sidelines,” says Brock Silvers, man-
portfolio companies to compete against familiar with digital payment to begin aging director of advisory irm Kaiyuan
each other and lends support only to the with,” said Shi in a recent conference Capital. “his resulted from a cocktail
last ones standing. call. “But as this site took of, it is helping of massive access to capital, government
Alibaba, by comparison, is more WeChat recruit more users for its digital encouragement and perhaps a dash of
focused on retail and e-commerce. wallet.” corporate hubris.”
The Hangzhou company is also more Tencent is also reaping huge rewards But Gobi Partner’s Xu says it makes
involved in the startups it invests in, when it cashes in its investments. Since sense for Tencent to keep investing.
sometimes with the goal of eventu- the beginning of last year, 12 of its port- WeChat, for one, has more than 1 billion
ally acquiring them. “Alibaba usually folio companies have gone public—more users, but Tencent doesn’t have ways to
hopes for some degree of control in than any investment irm or corporate make money of them beyond advertis-
the companies it invests in,” says Xu, investment arm worldwide, accord- ing and linking them to its online games.
who has worked with the e-commerce ing to CB Insights. At the time of those It must explore outside services that can
giant as well. “What Tencent wants are exits, Tencent’s stakes in the companies, be brought onto its platform so users can
partners that can leverage the com- such as China Literature and the gaming become more engaged and stay for longer
pany’s resources and bring additional platform Sea, was worth more than $20 periods. “Tencent can’t do everything on QILAI SHEN/BLOOMBERG
services.” billion. its own,” he says. “So it now sees a lot of
For example, Tencent’s WeChat app And it has plenty of listings in the value in investing.” F
46 | FORBES ASIA SEPTEMBER 2018
