despite modest improvements in the country’s economy and a more lenient attitude of regulators toward the tech sector, Chinese internet giant Tencent on Wednesday ( Mar 20 ) posted its lowest annual profit since 2019.
Tencent’s total net profit for 2023 stood at 115.2 billion yuan ( US$ 16.0 billion ), according to a filing of annual results at the Hong Kong Stock Exchange.
China’s technology sector experienced rapid growth for years, and in 2020, Beijing abruptly stopped, with the introduction of more stringent oversight measures.
As global issues about the health of China’s economy grow, authorities have since relaxed their strategy to regulating the crucial private tech industry.
Google- one of the world’s leading games firms and creator of China’s widespread messaging and services app WeChat- announced on Wednesday 609.0 billion yuan ( US$ 84.6 billion ) in complete revenue in 2023, up 10 per cent year- on- year.
The Shenzhen- based company also announced plans to increase the size of its share buying plan, more than doubling in 2024 from last year to “over HKD100 billion” ( US$ 12.8 billion ), the filing said.
Tencent’s annual income decreased by 16 % in 2022 as a result of a new assault by authorities on youth video game addiction.
And despite more new signs of vitality in the market, the regulatory obstacle for new games remains “relatively large”, Li Chengdong, creator of Beijing- based tech consultancy Dolphin, told AFP.
Before being released in China, new games must first be approved by authorities.
All new game licenses were issued for nine months in 2021, and approvals have not since returned to the same speed and dependability as in previous years.
” Even if ( Tencent ) develops new games, there’s no guarantee it can distribute them”, Li said.
Alibaba, Huawei, and Baidu are just a few of Tencent’s domestic competitors, which are now focusing on the promising field of artificial intelligence ( AI ).
Last September, Tencent unveiled Hunyuan, an AI- powered chatbot intended to compete with the US’s ChatGPT, whose services are not accessible in China.
Wednesday’s filing hailed Hunyuan as a” top- tier foundation model with superior performance in numerical reasoning, logical inference, and multi- turn conversations”.
But despite the push into AI, gaming still represents Tencent’s most important business, Li told AFP, adding that “in the short term, there’s not much expectation that the revenue from AI products could cover the costs”.
Tencent is still cautious about making big moves as many Chinese tech companies start investing in AI, according to Beijing-based tech expert Kevin Zhou.
” Tencent is ) slower in pouring investment and could be up to one or two years behind the first movers,” Zhou said.
By acquiring stakes in emerging studios, particularly in Europe, the company is attempting to strengthen its position in the video games industry.
Tencent, founded in 1998 in the midst of China’s rapid economic development, is a key player in the country’s tech sector as the parent of the WeChat” super- app”.
WeChat is on most mobile phones in China, where it is used for a wide range of purposes including messaging, calling, digital payment and social media.