On January 29th, TENCENT held its annual conference at the Shenzhen Bay Sports Center. TENCENT's Chairman and CEO, Ma Huateng, reviewed the development of various businesses under TENCENT in the past year and proposed plans for the future. At the same time, he also pointed out some internal management issues.
Ma Huateng mentioned that since the proposal of &#34;Internet+&#34; in 2015 to the announcement of &#34;Rooted in Consumer Internet, Embracing Industrial Internet&#34; in 2018, TENCENT has actively transformed. He has been traveling around the country for this purpose. However, in the past four years, he has rarely appeared in public and has been focusing on internal management and products.
Regarding the regulation of the development of internet platforms, Ma Huateng believes that for TENCENT, this is also a measure of self-examination. He hopes that TENCENT employees can maintain a calm mindset. &#34;If we find any problems, we should actively correct them. I am still very confident in the long-term development of the company.&#34; Ma Huateng said.
Ma Huateng also stated that &#34;confidence is currently the most lacking in the overall environment.&#34; In January 2024, the Beijing Municipal Planning and Natural Resources Commission's official website disclosed that TENCENT invested over 6.4 billion yuan to acquire a piece of land in Haidian District, Beijing. It may seem like a confidence-boosting move to the outside world, but Ma Huateng stated that acquiring the land was a carefully considered decision, not just for boosting confidence.
<h2>WeChat: Video Accounts Live Up to Expectations, Fully Developing Video Account Live-streaming E-commerce</h2>
This is currently TENCENT's most robust platform in terms of daily active users and the entire ecosystem, but it has also been around for 12 years. QQ went from prosperity to decline, and then to the anticipation of the next transformation, which also took 12 years. Therefore, how this old tree of WeChat can sprout new branches is a big question. Among the BAT companies, it seems that we are the only ones who still have the opportunity to sprout new branches, while other new trees are growing vigorously, which also brings us a lot of pressure.
A year ago, I said that Video Accounts were the &#34;hope of the entire TENCENT.&#34; After more than a year of development, it has indeed lived up to expectations and brought us many surprises in the process of growth. It has provided us with a solid foothold, especially after the failure of short videos in the past. The most crucial point is that we are not just following others to do the same thing, but combining our own characteristics to create short videos based on social connections.
Our user group has strong consumption power, but we still need to make up for the lack of e-commerce knowledge over the years. Therefore, this year, we will fully develop video account live-streaming e-commerce. E-commerce and advertising complement each other.
In addition, WeChat still has many new branches in the works, such as mini-programs, mini-games, and search. It is worth considering how to keep our products and services evergreen.
<h2>Gaming: Can't Rest on Our Laurels, Gaming Going Global is the Company's Biggest Hope for Internationalization</h2>
Gaming is our flagship business and is currently touted as the world's largest gaming company. It seems like we can rest on our laurels. However, in the past year, we have faced significant challenges. New-generation gaming companies have emerged one after another, and we have been at a loss in the transition from gameplay-oriented to content-oriented. Our competitors keep producing new products, and we feel like we have made little progress. We have also launched new products, but they haven't performed as well as expected. Recently, we have just entered the battlefield with the casual family party game &#34;Star of Dreams.&#34;
Although it's late, for us, it's not just a game, but also has a social element. This is our stronghold, and we must go all out and require all businesses to integrate and explore common development.
Game globalization is actually our company's biggest hope for international expansion. In the past few years, we have had certain advantages and established a good reputation in the development and operation of mobile games by overseas major IP game companies. We hope to horizontally penetrate and solidify in software and game development, rather than confront other game companies or hardware manufacturers from a vertical perspective. The key is to find our own main business and focus on it, which will increase our chances of success.
Now we are revitalized, just like being injected with chicken blood, and we have restored the process of how we stepped up in the game industry from being outside the top ten. Remembering the difficulties of starting a business will ignite our fighting spirit. We cannot rest on our laurels, as standing still means falling behind.
<h2>PCG: &#34;Particularly Difficult&#34;</h2>
PCG is a collection of all our old businesses, and it's particularly difficult. Our biggest requirement last year was to resurface and survive. We hope that QQ can find its future product positioning, including the new test channel, which may have some intelligent agents, and we hope they can stand out. In fact, many of QQ's product services are good, but they are limited to the QQ circle and cannot break out. I told the team that we should encourage user retention, lower the threshold, and even allow anonymous usage without logging in. Many services and content can actually be consumed on QQ. We need to open up our thinking, break out of the circle, and provide many products to users in a different way.
PCG also has many old businesses, such as long videos. TENCENT Video has made great progress in the past year with &#34;The Long Season,&#34; &#34;The Three-Body Problem,&#34; and &#34;Flowers in Fog.&#34; We would rather not produce mediocre dramas and concentrate our resources on creating high-quality masterpieces. I think it's worth it, and it builds a good reputation. The key to supporting the entire long video membership lies in a few major dramas. If there isn't one every month, there should be at least one every quarter. Those small poles in the past couldn't support it, at most they could be used as utility poles for advertising, which is not very valuable. Now we need something that can support it, and the best product is the channel.
After transformation and organizational restructuring, TENCENT News has turned losses into profits. Browsers, app stores, and other platforms are also undergoing adjustments. In addition, companies like Yuewen, TENCENT Music, and Huya have been actively reducing costs and increasing efficiency in the past year, with very good results.
<h2>CSIG: Besides strategically important products and fundamental investments, we must quickly make progress and resurface</h2>
Internet enterprise services are very challenging and demanding. We haven't even started, and many companies have already entered the market, including Huawei. Last year, we took the lead in proposing that we should not pursue low-quality development but high-quality development.
We rank fourth in terms of revenue and third in terms of profit among internet platform enterprises. Many people feel frustrated, but it's not about quantity, it's about quality, and it's sustainable. It's new growth, not old leaves, and that's crucial. So, for each business, you need to consider: first, can it stay evergreen? New businesses are not easy to cultivate, so you need to think about how to keep your own territory evergreen; second, consider if there are new shoots, these shoots should be on your own branches, not found outside.
Many competitors have thrived under the leadership of a big brother, supporting seven or eight siblings. When times are good, everyone is happy. But when the big brother is struggling with slow growth, family conflicts arise as others feel they are not receiving enough resources. Many competitors have yet to realize this and continue to spend lavishly. I heard that Enterprise WeChat has already become profitable, which is commendable. However, the B2B market is extremely challenging.
Currently, we still have many products that are below the surface. Apart from strategically important products and foundational investments, we must quickly bring them to the forefront. This is an internal pressure. Now, we need to focus on our strengths, develop products, and maximize the gross profit of SaaS, PaaS, and IaaS supply chains by standardizing them.
Recently, we have uncovered many cases of corruption within CSIG and PCG, especially CSIG. Many of them were involved in personal entertainment and hospitality, which is not a suitable model for us due to its low efficiency and lack of transparency. Therefore, we should continue to focus on product development. We should be the ones being integrated, with others buying our standardized products to sell. Our internal management should be clear and clean.
One area that significantly impacts our profits is financial technology and the internet. There are many aspects to this, but the most important is payment, which accounts for a large portion of our market share. It is the only area where we are required to reduce our share. However, we are explaining that half of our so-called market share comes from direct deductions from bank cards, and the other half comes from transfers, not payments. Therefore, in the future, we need to manage risks and transform our products to show that we are cooperating with banks. We are just a channel, not competitors. As for other financial products such as loans and insurance, they are relatively new businesses, but I believe there is great potential for development using internet methods. However, we must pay attention to risks.
Problems in other industries can affect our products, and we may have to bear the consequences. Some people say that we don't need to bear the responsibility legally, but I believe that from a social responsibility perspective, we have a duty and obligation. Therefore, we must have risk awareness. In the financial industry, safety is what matters, not speed. The faster we go, the more dangerous it becomes.
<h2>Artificial Intelligence Technology: Not the most advanced, but not too far behind</h2>
AI was also a focus last year, not only for our industry but also globally. We have managed to keep up with the first wave, although we cannot claim to be the most advanced. However, at least we are not too far behind. I believe that in the future, we should integrate our AI hybrid models into various scenarios based on our own needs. In the short term, within one or two years, I don't think there will be a large-scale application of pure native AI. Instead, we should integrate AI into all our products to improve efficiency. I see this as a great opportunity.
After summarizing the development of our main businesses over the past year, Pony Ma once again turned his attention to management issues such as recruitment, layoffs, reporting, and anti-corruption, sharing his requirements and views.
He believes that Tencent should value the spirit of small teams in management because during the cost reduction and efficiency improvement process, the departure of many employees has had a significant impact on their families, causing some distress. Therefore, he urges managers to be more cautious when hiring, as layoffs have pros and cons and can have a major impact on individuals and their families. It is irresponsible to hire people when business is good and then lay them off after just two months if things don't work out.
When recruiting and employing people, it is important to be cautious. If you haven't figured it out yet, start with a small team and don't rush.
He used an incident that happened in PCG as an example. PCG originally had three recommendation teams, but he merged them into one team, including the search team. &#34;I also hope to integrate with other search teams in the company. We need to work together, not just to save costs, but to reduce the stupidity index. Otherwise, you will appear very foolish, and that is the biggest insult.&#34;
Finally, Ma Huateng talked about anti-corruption. He said that Tencent publishes a considerable number of anti-corruption cases every year, but there are always people who keep rushing in year after year. Therefore, the digitalization level of Tencent's anti-corruption efforts has now reached a point where it relies on reports and system discovery. Digital management, automatic discovery of various suppliers and documents, now accounts for half of Tencent's anti-corruption cases.

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Ma Huateng said that WeChat is currently the strongest platform in terms of daily active users and the entire ecosystem for TENCENT. However, we still need to make up for the lack of e-commerce knowledge over the years. This year, we will focus on the development of video streaming e-commerce. E-commerce and advertising complement each other.

Ma Huateng: Fully developing video streaming, live commerce, and having confidence is currently the most lacking aspect in the overall environment.