Growth for Chinese Tech Company Tencent, But Concerns Remain
Chinese tech company Tencent further increased sales in the second quarter of this year. As a result, profits were also higher than expected.
However, the company’s numbers have been overshadowed by increased competition in the Chinese games market, which is one of Tencent’s key components. Increasing attention from regulators and directors for large tech companies is also bad news for the company from Shenzhen, South China.
Tencent has a games branch and makes money with things like cloud services, a chat service, and a music streaming service. The most valuable Chinese company is therefore under fire on several levels. In recent weeks, there has been a lot of criticism of games from state media. For example, those games are said to be “digital opium”, and game companies do too little to combat addiction among young people. There was also criticism of games that would falsify history.
In addition, Tencent relies on older games like Peacekeeper Elite and Honor of Kings, while competitors come up with new hits. Tencent has therefore increased investments in mostly small game companies. Last year, there was also strong growth in spending on games due to the corona pandemic. However, it is difficult to sustain that growth.
But the music streaming service Tencent Music is also suffering from headwinds. He had to adjust exclusive deals with record labels to be able to stream music. In addition, chat service WeChat, which also includes payment services and social media, has been closely monitored by regulators for some time because it would make it difficult for users to use services from other companies.
Despite this, turnover rose by 20 percent to more than 138 billion yuan renminbi, which is about 18.2 billion euros. As a result, net profit, converted to EUR 5.6 billion, was about 40 percent higher than experts had expected.