Tencent to broaden overseas investments, target smart retail activities

Internet giant Tencent plans to broaden the scope of its international investments, eyeing more startups and new market segments such as smart retail.

Photo credit: Tencent

Tencent president Martin Lau Chi-ping unveiled the initiative at the company’s investment conference last week in Beijing, where he said “more communications and cooperation with overseas entrepreneurs” will be pursued to expand the Shenzhen-based firm’s global footprint.

There are currently more than 800 companies in Tencent’s investment portfolio, according to Lau, whose speech was initially posted on the firm’s social media account on Monday. More than 70 of these firms are listed, while more than 160 are unicorns, or startups with a market value of US$1 billion.

“In the past, our investment sectors were mostly focused on video games and content, as well as the [new] frontiers of science and technology,” Lau told a gathering of more than 500 Tencent-backed companies. “However, in the future, we will pay more attention to smart retail and payment platforms with the development of Tencent’s WeChat mini-app ecosystem.”

The Hong Kong-listed company’s latest direction comes after a year in which it took part in fewer deals, about 108 worldwide, compared with its investment spree in 2018.

That followed China’s overall decline of venture capital activity last year amid a domestic slowdown and uncertainties caused by the trade war between Beijing and Washington. Chinese companies raised US$35.6 billion over 2,047 rounds of funding from January to mid-November last year, compared to US$93.4 billion from 2,795 rounds over the same period in 2018, according to data from Crunchbase in November.

“The financing environment was very difficult in 2019,” Lau said. “Looking ahead, the market will still face a variety of uncertainties.”

Tencent, which runs the world’s biggest video games business by revenue and China’s largest social media platform, invested last year in companies ranging from health care to finance and ecommerce. One-fifth of these investments were in enterprise services, reflecting the company’s pivot towards a greater focus on the industrial internet since 2018.

On Tencent’s smart retail push, a new report from Jefferies analysts Thomas Chong, Ken Chong, and Mavis Lam said the company’s mini-programs are helping empower merchants. These include “enhancement in search experience, unified QR Codes for merchants’ goods, as well as enabling them with logistics and after-sales services.”

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