A DEEP DIVE INTO TENCENT’S RESTRUCTURING: THE STRUGGLE TO MASTER...

A few days ago Tencent officially announced a major restructuring (Link in Chinese), the third ever in company history. The move is a big deal for the Chinese internet industry as the repositioning of Tencent’s divisions reveals much about their long strategy and where they believe the future key internet and technology sector battles will take place. In this essay I hope to provide a detailed breakdown and analysis of the restructuring and the implications for Tencent’s strategy moving forward.Tencent has been subject to intense criticism in media throughout 2018, new government regulation issues loom large over the lucrative gaming business and the rise in popularity of short video applications and news applications from rival Bytedance has called into question their dominance over online attention. These are undoubtedly trying times for Tencent, the bright spot being their flagship product WeChat which seems to have made a breakthrough this year with widespread adoption amongst businesses of their mini program format.“The Internet is a fast-changing industry, and the competition is fierce. In the past 12 years, my most profound experience is that Tencent has never had a day with peace of mind. We are skating every day. Always worrying that an omission will give us a fatal blow at any time, always worrying that users will abandon us.”– Tencent CEO Pony Ma, interview for People’s Daily.Before we delve deeply into the recently announced changes, I think it’s very useful for us to take a step back and cover a little bit of Tencent history to analyze some of the previous organizational changes made at Tencent and how they worked out.