“In the grim picture of Chinese tech, Tencent is the company that is doing the best”

LPatience is a major constant in Chinese strategy. As General Sun Tzu already suggested more than two thousand five hundred years ago, there are times when opposing forces are so powerful that it is prudent to wait, while having a cup of tea, for the elements to calm down.

For entrepreneurs in the Middle Kingdom, that time has come, because the storm is brewing outside. The real estate crisis is wreaking havoc, the zero Covid strategy is paralyzing big cities, and the great helmsman Xi Jinping launched, in 2021, a moral crusade to protect children from video games and an economic crusade to break the oligopoly of the giants of the Internet. Chinese tech stocks listed on the US Nasdaq have lost two-thirds of their value compared to 2021.

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In this grim picture, Tencent is the company that is doing the best. It remains the most valued company in China (380 billion euros) and its profits have fallen “only” by 56%. Even if, like its rival Alibaba, it recorded the first drop in turnover in its history in the second quarter. It must be said that the group has shown its credentials towards power, by supporting its propaganda on its WeChat network and by beginning its disengagement from numerous participations.

An ecosystem on its own

Because Tencent is an ecosystem on its own. He is the main player in Chinese venture capital with a portfolio of nearly 90 billion euros, present in thousands of start-ups, as in large groups such as Meituan, the Chinese leader in meal delivery, or JD .com, the e-commerce giant. But he is also the first investor abroad, with stakes in Snap, Spotify or Universal Music.

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Today it is the equivalent of Microsoft, Facebook, Hollywood and the Softbank fund. World leader in video games, today it derives its strongest growth from networked IT infrastructures, the cloud. While waiting for the good weather to return, he is not content to just have tea. It is tightening the purse strings, cutting 5,000 jobs and selling its less profitable holdings, and continues to invest in cheap nuggets internationally, such as Ubisoft.

Already Beijing is gradually loosening its grip on video games, and young Shanghainese, laptops in hand, are firmly awaiting liberation.