The not much talked about company from China. Tencent.
"Chinese companies are much more innovative [than U.S. companies] in integrating social media, gaming, ande-commerce to make an amazing user experience," says Sun Baohong, associate dean of global programs at Beijing-based Cheung Kong Graduate School of Business."
The company has entered US markets.
Tencent Goes Global
With one word in 2012, Tencent announced its
philosophy of global expansion--and that word was "WeChat," the
friendly English name it gave its international version of Weixin. WeChat, an app with many of Weixin's most popular chat
functions, was marketed aggressively across Southeast Asia, and results were
strong: It gained more than 100 million users outside China by last summer, and
it was the second-most-downloaded app in India in 2013.
But despite WeChat not being so explicitly Chinese, the shadow of the
Chinese government has followed it. India's
government has expressed concern that the app poses a
"security threat." Tibetan activists outside China tell their
community to switch to other messaging services. Hu Jia, a Chinese dissident,
who has claimed that Chinese officials knew about things that he had
communicated only on WeChat, has called it "a monitoring weapon in your
pocket."
In the U.S., for now, WeChat has mostly been adopted by Chinese expats
who use it to talk to friends back home. And following the scandal over the
U.S. National Security Agency spying on emails--in which
American tech companies played a role, but can at least oppose such efforts
publicly--American users may be a hard sell on an app with this much government
contact. "The difference is that here in the U.S., at least there are some
legal controls," says Internet expert Mackinnon. "In China, if the State
Security people ask for something, they just get access."
It's not clear how much all this will stymie Tencent's efforts
in the U.S., largely because it isn't clear what Tencent's U.S. plan is. David
Wallerstein, a Chinese-speaking tech entrepreneur, opened the Tencent office in
a converted church in Palo Alto in 2007. A Tencent spokesman said he is
"quite reticent to speak to any media," which is certainly true:
After months of requests from Fast Company, he finally agreed to
speak--though the publicist said he would limit the discussion to topics such
as "why we are unique." After many delays, though, he backed out
entirely. The publicist explained that, in the process of preparing for the
interview, he'd written down thoughts that he ultimately decided should become
a memo sent out to his own staff instead.
For now, Tencent's
public moves in the U.S. tell a cautious tale of small-time acquisitions and
investments. Mostly, the company seems interested in startups whose
technologies might be useful to Tencent back home. It participated in a $22
million funding last fall for Plain Vanilla Games, which had just launched QuizUp, a super successful multi-user mobile
quiz game. "Tencent has been less focused than other investors on
strategies of prevaluation and growth multipliers and profit," says Thor
Fridriksson, Plain Vanilla's founder. "They say, ‘Don't worry about
revenue right now; just focus on the user experience.'"
Tencent's larger
investments, a $330 million stake in Epic Games and the purchase, for $400
million, of Riot Games, which produces the incredibly popular League of Legends, also seem aimed
at expanding access to killer content for its Chinese users. "Having the
most popular e-sport title
is such a huge marketing advantage," says Piers Harding-Rolls, who leads a
team of gaming industry analysts at London-based IHS Technology. "They are
building their capabilities to provide an end-to-end entertainment
experience."
Tencent's
investments have a more ethereal role as well: Local partners become Tencent
advocates, and help its stateside image. "Tencent really understands
engagement, how to push the emotional factor to our users," says Chase
Adam, whose philanthropic website, Watsi, received a Tencent investment. Vibhu
Norby, whose social networking company Origami got early Tencent funding, says
he's learned a lot from the company about how to scale up a user base and its
storage architecture. "You can't support all those millions of users
without incredible
backend technology and
creativity," he says.
If Tencent does decide to aggressively push its own products in America, its sheer size will make it an instant competitor. For example, Tencent recently offered 10 TB of free cloud storage to users--an offering 100 times larger than what Dropbox, Box, Microsoft SkyDrive, Google Drive, and even Mega (run by Kim DotCom) offer combined. If you want 10 TB of storage from Google, it will run you $100 a month.
But Silicon Valley's big shots are no doubt watching--and preparing. It's hard to imagine that Mark Zuckerberg purchased WhatsApp for as much as $19 billion without having the similar WeChat in his rear-view mirror. Bonus for Zuckerberg: Facebook is blocked in China, but WhatsApp isn't.
