Chinese tech giants Tencent, Baidu and JD.com spend more to find new revenue sources amid slowing growth
- The companies are expected to report an average 42 per cent jump in operating expenses in the March quarter
Three of China’s biggest tech companies are expected to report that they ramped up or broadly maintained their pace of quarterly spending to develop new technology and push into relatively new markets, as current growth drivers stall.
Used to rapid growth rates until recently, Chinese tech giants including Tencent and Baidu are seeking new revenue streams. But that has not come cheap as they shell out more to hire the best in a competitive job market and keep spending to attract customers in a slowing economy.
Social media and gaming company Tencent, search engine provider Baidu and e-commerce firm JD.com are expected to report an average 42 per cent jump in operating expenses in the March quarter compared with a year earlier, against a 19 per cent rise in revenue, according to analysts estimates from Refinitiv.
The exception - for the latest quarter at least - is Alibaba, China’s largest listed company, which is expected to cut operating expenses for the first time in its history as it tries to shore up its bottom line after a sharp drop in profitability in the year-ago period. Alibaba owns the South China Morning Post.
“Competition is more intense and customer acquisition costs are increasing,” said Jerry Liu, who heads the China internet research team at UBS.