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Exclusive | China’s Big Tech companies, from Tencent to ByteDance, cut back on strategic investments as Beijing’s scrutiny continues

  • Tencent has downsized its investment department, months after TikTok owner ByteDance dissolved its own strategic investment unit
  • The Shenzen-based internet giant made just 32 investments and acquisitions in the first half of this year, compared with 129 in the same period in 2021

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With the collapse in both public and private valuations, investment gains are not expected to provide a boost to Tencent Holdings’ earnings. Illustration: Shutterstock
Coco Feng
China’s Big Tech companies, from internet giant Tencent Holdings to TikTok owner ByteDance, are paring down their strategic investment units, according to industry sources and publicly available data, in line with efforts to reduce new acquisitions because of Beijing’s continued scrutiny of the sector.
Tencent, which runs the world’s largest video gaming business by revenue and China’s biggest social media platform through super app WeChat, saw some teams from its downsized investment department lay off half of their members, while a number of affected employees were reassigned to other business units, according to three people with knowledge of the matter, who declined to be named because the information is not public.

That personnel adjustment was reflected in the company’s latest investment and acquisition figures, which have headed south. China’s most valuable tech enterprise made just 32 investments and acquisitions in the first half of this year, which accounted for about a quarter of its 129 total transactions in the same period in 2021, according to data from ITjuzi, a market research firm that tracks deals in China’s internet industry.

Shenzhen-based Tencent, which was once thought of as “owning half of the mountains and rivers” in China’s tech industry because of its aggressive investment strategy, declined to comment.

Internet giant Tencent Holdings recorded a sharp decline in the number of its investment and acquisition deals during the first half of this year. Photo: Shutterstock
Internet giant Tencent Holdings recorded a sharp decline in the number of its investment and acquisition deals during the first half of this year. Photo: Shutterstock

Investments have been more financially important for Tencent, according to Arete Research. It indicated that Tencent’s pre-tax profit from investment, for example, contributed to 63 per cent of its overall income in 2021, compared to 36 and 15 per cent in 2020 and 2019.

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