Tencent defends investment spree as core strategy amid venture ‘capital winter’ concerns

Tencent Holdings president Martin Lau Chi-ping launched a robust defence of the company’s practice of taking stakes in hundreds of companies, saying that investment is part of the Chinese internet giant’s core strategy.

“Last year, there were those who equated Tencent doing investments to the company losing its aspirations, Tencent becoming like an investment bank,” Lau, a former Goldman Sachs investment banker, said at an annual gathering with its investee companies in Beijing last month.

“In reality, if we tried to control everything, do everything, it’s not an aspiration, but a fantasy,” he said. “Investing allows us to focus on the most important, the platform business, and make it the best. At the same time, we can let our partners do what we’re not good at, make it complementary.”

Lau was referring to an online essay criticising Tencent for driving growth these days through investments rather than original innovation. The essay, titled “Has Tencent lost its dream?” was widely read and discussed in China, with rival technology company chief executives weighing in to voice their opinions.

Tencent’s products dominate the country’s internet and media landscape, including instant-messaging software service QQ and social media platform WeChat, which has more than 1 billion monthly active users. The Shenzhen-based company, which also runs the world’s largest video games business by revenue, has been expanding into different sectors including e-commerce, with analysts attributing its investment strategy as a key factor behind the surge in its share price since its listing in 2004 in Hong Kong.