Tencent Holdings

Tencent Holdings Limited (SEHK: 700) is a publicly owned holding company whose subsidiaries provide internet and mobile phone value-added services and operate online advertising services in China.

Tencent's diverse services include social networks, web portals, e-commerce, and multiplayer online games. It operates the well-known instant messenger Tencent QQ and runs one of the largest web portals in China, QQ.com.

As of December 31, 2010, there were 647.6 million active Tencent QQ IM user accounts, making Tencent QQ the world's largest online community. The number of simultaneously online QQ accounts has sometimes exceeded 100 million.

As of November 2010, the company is the third largest Internet company in the world behind Google and Amazon with a market capitalization of US$38 billion. Other big, Chinese Internet companies include Sina and Baidu.

Patents

As of 2009, the company held 400 patents.

Incorporation

Tencent Holdings Ltd is incorporated in the Cayman Islands.

Name

The name "Tencent" is derived from the Chinese phrase "十分" (Pinyin: shí fēn). The first character 十 (shí) is the number 10. The second character 分 (fēn) is a measurement that can be used to represent one cent, where one 分 (fēn) is a one-hundredth subdivision of one yuan. The word 分 (fēn) traditionally refers to 1/10 of something, and is used in common Chinese phrases like "十分" to describe 100%, perfection, or "very". For example, "十分强大" (shí fēn qiáng dà) would translate to "very powerful".

However, the Chinese name for the company is not "十分" (Pinyin: shí fēn). Instead, it is a loose transliteration of "Tencent": 腾讯 (Pinyin: téng xùn).

Virtual goods

Tencent sells virtual goods for use in their MMOs, IM client, social networking sites, and for mobile phones. Income from the sale of virtual goods was a large proportion of Tencent's revenue in 2009. And the sort of games Tencent makes will see increasing popularity until 2013.

Tencent's online currency, Q Coins, can be used to purchase virtual goods. These range from the offbeat, such as virtual pets and the virtual clothing, jewelry and cosmetics needed to customize online-game avatars, to the more mundane, such as more storage space, wallpapers, bigger photo albums and ring tones.

Products and services

Tencent offers a diverse mix of services and includes both consumers and other businesses as customers.

Copying claims

Many of Tencent's software and services are remarkably similar to those of competitors. The founder and chairman, Huateng "Pony Ma" Ma, has famously said, "Copy is not evil." Competitors are quick to denigrate. A former CEO and President of SINA.com, Wang Zhidong, has said, "Pony Ma is a notorious king of copying." Jack Ma, the founder, chairman and CEO of Alibaba Group, has also said, "The problem in Tencent is no innovation. All things are copies.

History

Tencent was founded by Ma Huateng and Zhang Zhidong in November 1998 as Tencent Inc, with money from US venture capitalists. Remaining unprofitable for its first three years, by 2000 its OICQ messenger had 40 million registered users.

South African Naspers purchased a 46% share of the company in 2001 (as of 2010, they own 35%). It was during these early years that Tencent's messenger product had its name changed to QQ; this was said to be due to a (apocryphal) lawsuit from ICQ itself. Tencent Holding Ltd was listed on the Hong Kong Stock Exchange on 16 June 2004, and was added as a Hang Seng Index Constituent Stock in 2008.

Originally the company derived income solely from advertising and premium users of QQ, who pay monthly fees to receive added extras. But by 2005, charging for use of QQ mobile, its cellular value-added service, and licensing its iconic penguin character, which can be found on snack food and clothing, had also become income generators. And more recently, Tencent has seen profit from sale of virtual goods.