Pony Ma sets out Tencent’s industrial internet ambitions as it looks to China’s future economy
- Tencent founder set out his industrial internet vision in an open letter ahead of global partner conference
- Pony Ma says battleground of mobile internet is shifting from the consumer to industry
Chinese internet giant Tencent, which operates the country’s dominant social media platform WeChat with over one billion monthly active users, is now looking beyond consumers to the huge potential of the industrial internet – where it aims to support the digital transformation of China’s economy.
Tencent wants to enable greater connectivity across Chinese industry, leveraging the capabilities and expertise it has built to serve the billion-plus users of its consumer-facing platforms, enhancing products and services, Tencent CEO and founder Pony Ma Huateng wrote in an open letter on Wednesday ahead of its global partner conference in the eastern Chinese city of Nanjing, Jiangsu.
“Tencent has always been talking about how to connect people with other people, objects and services. It became clear to us that if objects and services are not fully digitalised, the connection between them and people cannot be improved,” Ma wrote in the letter.
“We believe that the first stage of the mobile internet, the consumer internet, is drawing to a close and the second stage, the industrial internet, is kicking off. With the digitalisation process ongoing, the main battlefield of the mobile Internet has moved from the consumer internet to the industrial internet,” Ma wrote.
Companies looking to reap the benefits of smart retailing and smart manufacturing – which involves leveraging fast and high-capacity internet connections, big data capabilities and sensors that allow devices to ‘talk’ to one another – will need to work with internet companies to unlock the immense potential of the industrial internet, said the low profile Ma.
Ma’s open letter sheds light on the rationale behind Tencent’s latest reorganisation and is the first time management have elaborated on the new strategy since it was announced at the end of last month. Ma’s articulation of where Tencent is headed next may help to lift some investor uncertainty amid a global tech sell-off, a crackdown by Beijing on content and a halt in approval of new games since March, all of which have helped knock over US$220 billion in market value off Tencent this year.
The new direction is also in line with China’s wider ambitions to lift its industries up the value chain and better compete globally in emerging technologies, such as artificial intelligence, in what has been dubbed the Fourth Industrial Revolution. The Nanjing event will be Tencent’s first large-scale event since it announced the strategic reorganisation.
Tencent’s revamp will see the creation of a new business group devoted to cloud and smart industries. Another new group will combine its social media, mobile internet and online media operations, in a nod to the need for more strategic coordination with the emergence of competitors such as ByteDance, whose artificial intelligence-driven algorithms for news and short videos have captured market share from Tencent’s own video and news platforms.
Tencent will also form a new technology committee that will create an internal platform for the sharing of fundamental technologies within the company and apply them to different industries. This should help Tencent build an ecosystem for supplying new technologies such as cloud computing, big data and AI tools to industries undergoing digital transformation.
“The new cloud and smart industries group will integrate all the AI and cloud development functions within various parts of the business to maximise efficiency,” said He Saiyi, an analyst at Huatai Financial Holdings, in a research note earlier this month. “We believe the formation of this new business group will help the company better allocate resources and create synergies, and to also provide better industry solutions.”
Ma drew public attention last week by posting questions on Zhihu, China’s answer to Quora, asking about the basic sciences that will impact the internet in the coming decade and changes resulting from the combination of the industrial and consumer internet. The responses ranged from a brain-computer interface to quantum computing and data storage capabilities.
Alibaba Group Holding co-founder and executive chairman Jack Ma Yun in September set out his vision for ‘New Manufacturing’, which involves integrating the internet, big data, AI, cloud computing and the internet of things into the manufacturing process. Ma said it would be a vital growth driver of China’s economy.
E-commerce giant Alibaba is the parent company of the South China Morning Post.