Known globally as the WeChat Company, Tencent is the largest Internet service provider in Asia, with a market capitalisation (as of April 16, 2015) of US$193bil. It delivers value-added Internet, mobile/ telecom services and online advertising, in order to fulfil the strategic goal of providing users with “one-stop online lifestyle services”.
In 2006, when SY Lau (pic) joined Tencent as one of the senior management team, he focused on driving corporate growth with the specific mission of overseeing Tencent’s Online Media Group (OMG).
Today, OMG is one of the largest media companies in the world, with a portfolio that includes a matrix of online information and entertainment products.
We sit down to talk to the Star Speaker of this year’s Chief Marketing Officers (CMO) Conference.
I came from an average family and was raised by parents who believed strongly in traditional Chinese parenting. I am the eldest in the family with two younger sisters. My dad worked in the Nanyang Press for more than 25 years before he passed away at an early age due to illness. My mom was an excellent tailor, but I guess my sisters and I would remember her most as a disciplinarian who instilled the spirit of inquisitiveness and competitiveness within us during our formative years.
I studied in St John’s Institution before graduating with a major in Mass Communication from one of the local universities. Subsequently, after working for 10 years or so, I obtained my MBA from Rutgers, the State University of New Jersey, and graduated from Harvard Business School upon completing their pinnacle AMP programme.
My first job was with McCann Erickson as a trainee account executive. How did I get the job? When I was in the final year of my undergraduate studies, I decided to conduct a field research on the Malaysian Advertising Industry using collections of communication theories. The research effort opened up doors for me to conduct field work with more than 10 leading advertising agencies in Malaysia.
A month before my graduation, I received six job offers from the top 4As agencies, and Noel Derby offered to pay RM1,000 to have my work translated into English for use by his company.
I chose McCann because of two reasons. I strongly believed in the motto of the company, Truth Well Told, and, more importantly, Ong Thiam Hong impressed me as a sincere business leader.
Did you go to China by accident or was that part of your plan for a long time? How did it all begin?
Well, it was both by accident and somewhat part of the plan. I was fluent in both English and Mandarin and I thought that if I had an opportunity to venture overseas, China would certainly be my first choice.
I remember when the opportunity came, I was already working with Leo Burnet. One day during lunch, I met Ong Thiam Hong and he told me McCann Hong Kong was in trouble.
One of their biggest international clients, Nestlé, had a new managing director for Greater China, and she was about to fire McCann. The new MD was Leong Ming Chee, a highly respected Nestlé veteran from Malaysia, with a remarkable track record in one of the most significant markets in Asia.
So, the McCann regional management team was frantically looking for a lead person to solve this problem. Apparently Ong had given my name to the regional team based on the fact I used to be one of the well-respected account leaders on the Nestlé account in Malaysia.
I spent the next three years stabilising and building the Nestlé business for McCann, by nurturing and building a professional local team from scratch.
We ended up winning more than a dozen new business accounts for both China and Hong Kong markets.
During this time I won the prestigious Milo Account for China and the media Agency of Record (AOR) , which was a first in Asia.
China is a huge market, and I have seen many business professionals cutting corners here and there in the name of responding to pressure. Irrespective of industry, I think business people today could excel more if they were more conscious of focusing on leadership led by principles.
This reminds me of an advertising campaign that I saw recently on CNBC; I think it is for a bank from Singapore. The story goes… a father was bringing his son to a fun fair. As the father was purchasing tickets to enter the circus, the ticket seller said it would cost a dollar for an adult ticket and half price for children under four. The father then asked for two tickets. The ticket seller appeared to be shocked and asked curiously about the age of the boy, to which the father replied five. The ticket seller then said you could have told me he was four and I would have let you in without knowing. The father replied while holding his son’s hands, “Well, you may not have known, but he would have.”
Today, we live in a world where few people believe principles really do define who we are. It is my wish we have more principle-driven executives in the business world.
In recent years, I have been honoured to be invited to deliver a number of speeches at some of the world’s leading universities. The main topics of the speeches explored the development of China’s digital economy environment and Tencent’s role in that development.
In 2012 at Stanford, taking into consideration that the number of Chinese web users had increased slowly since June 2008, I predicted that the demographic dividend (the organic growth brought by the growing number of Chinese Internet users) is going to be cashed out.
So, I proposed that targeted advertising placement and personalised content creation would be the key to break the bottleneck.
I believe that mobile media can not only help advertisers with product promotion, brand communication and customer relationship management, but also with the integration and optimisation of business models, which can become a new marketing platform in the long run. Future digital marketing will go Personal: shifting from media buying to user buying; go Richer: developing a technology-driven creative team and raising the proportion of developers; and go Offline: powering the integrated marketing model with O2O, and achieve closed loop marketing from advertising to sales.
At the Said Business School of Oxford University last year, I shared opportunities brought about by the growth of mobile Internet access across China; we see opportunities at three different levels: the consumer level, the industrial level, and then extending to the level of the whole economy.
Mobile Internet meets the pent-up demand of Chinese people for increased and upgraded levels of consumption, facilitates a long called-for industry transformation as well as expediting the liberalisation of the national economy.
In short, the Internet plays the role of an enabler to transform the new thinking of sustainable development into reality under what we call the New Normal.
The second-mover advantage triggered by the Internet industry can be summarised by examining two different perspectives: Industrial and Geographical.
Very simply put, the Internet has changed the lives of people in China in profound and meaningful ways.
It provides not only a new way of thinking and doing, but a feasible methodology for achieving China’s economic goals. The Internet is not just a resource; it is a means to turn dreams into economic reality.
I think Malaysia had the vision a long time ago, but unfortunately this vision was not implemented to the best of its potential. At the end of the day, the Internet today has become a basic infrastructure, and it should be discussed at a national policy level.
When I attended the recent BoAo Economic Forum, I had the privilege to meet and dine with Tun Abdullah Ahmad Badawi.
He patiently listened to my story of how the private sector got involved in formulating a national policy for Internet Plus in China.
As you know, one of the most significant characteristics in the development of China’s digital economy exists in its integrating with various industries at high speed.
In China, we call this procedure “Internet Plus” – Internet plus the retail industry, plus the real estate industry, plus the manufacturing industry, and of course, plus the media industry.
China has already revealed that Internet Plus will become a policy for the country alongside another national strategy for the manufacturing industry, that is “Made in China 2025”.
A government fund of 40 billion yuan (US$6.38bil) has already been put in place for investment in China’s emerging industries.
Meanwhile, the “Broadband China Project” is being carried out. It will help to make broadband coverage in China reach over 250 million users, and a newly-gained user number of 4G service hit 200 million by the end of 2015.
All of these provide guarantees for the development of the digital economy.
Since Internet companies are always impacted by the combined forces of technology and users, I want to talk about some opportunities that I see as solid and realistic here…
Connecting the last billion
First of all, it took 20 years for the Internet to really take hold in China, turning 47.9% of the total population into Internet users.
For the other half of the population who are not yet using the Internet, a lot of them are elderly, young children, or those who cannot afford the necessary equipment.
To plug those people into the Internet world with easy and inexpensive access will be our major mission in the near term.
I think mobile phones are the most viable option to achieve this goal. Through what Nicholas Negroponte of the MIT Media Lab calls, “connecting the last billion”, I believe Tencent will be capable of enabling the development of China even more.
Media of the ‘Mega Web’
Actually, I call this idea of a fully inter-connected world “the world of the Mega Web”, in which the role of the media will greatly expand. The media is already connecting users to content, and it will further connect us to many more things; more devices, more context, more people.
Media will expand to touch almost everything, everywhere. When connectivity expands to that level, singularity will be triggered. The information that we have will become “intellectual” as Big Data accumulates, interconnects and becomes available to even more devices. This expanded access to intelligence is the basic information we act upon, machines act upon and entire smart cities act upon.
The future: connect, call out, make the whole community answer
When data itself becomes both interpretive and predictive, a judgment like “Something needs to be done to improve this situation” will more frequently be made by media rather than people, and more insightfully than we can imagine now. Once everyone is inter-connected, we will be able to reach out to every member of the society, in every remote part of the globe, and call for collective actions to solve problems both locally and globally.
Currently, our mission is to support the Internet Plus Action Plan of China. We are ready to cooperate with the partners and potential partners coming from different vertical industries on a strategic level, so that together we can provide better O2O commerce, online payment experiences and smart livelihood services for our users. We see opportunity around the world, whether this is for our own apps like WeChat or for partnership and investment in Western businesses.
I think WeChat is possibly the most recognisable brand for those in the US or UK.
Tencent also supports other famous brands around the world in markets like gaming and social. Companies like Epic Games and Riot Games are owned by Tencent, while we have our own gaming IP that is successful in China.
To see SY in action on April 21, visit http://www.marketingmagazine.com.my/cmo20015
– The Star/Asia News Network
Tencent released its Q1 results earlier this month, including the latest monthly active user figures for its various social platforms.
As the chart above shows, Tencent’s platforms have attracted a huge share of the world’s
social media users, even if the majority of those users are still based in China.
Despite this geographic focus, Tencent now accounts for 3 of the world’s top 5 platforms, driven by the continuing growth of QQ, Qzone and WeChat:
Qzone alone now accounts for around 40% of the world’s social media users.
Moreover, the impressive growth of WeChat (Weixin), both in terms of its active user numbers as well as the platform’s functionality, suggests that Tencent is still far from reaching its peak.
Is it only a matter of time before the rest of the world joins the Tencent family?
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