- Tram Ho
The move of the leaders of the two businesses mentioned above came after Alibaba and Tencent announced business results that were lower than experts’ expectations.
Two Chinese tech giants, Alibaba and Tencent, have previously repeatedly announced their innovations and new products in profit meetings with investors.
According to CNBC, last quarter, things were different. Executives at China’s two biggest tech companies talk about another goal that isn’t as grandiose as reducing costs.
The move of the leaders of the two businesses mentioned above came after Alibaba and Tencent announced business results that were lower than experts’ expectations, it is really understood that the period of prosperous business of the two businesses. This is no more.
Last week, for the first time in history, China’s leading e-commerce company Alibaba reported no growth in revenue. On Wednesday, major gaming and social media company Tencent also reported a year-on-year decline in quarterly revenue, unprecedented.
Thus, it is clear that the slowdown in economic growth due to the blockade measures to prevent the COVID-19 epidemic has affected all Chinese businesses and Alibaba or Tencent are no exception. Tightening regulations that regulate the tech industry in everything from antitrust to online gaming has also had a negative impact on the bottom line of these businesses.
And when revenue has a lot of negative effects on people’s consumption or advertising budgets, both big businesses have had to consider “austerity” measures.
“ During the last quarter, we had to actively stop non-core business activities, reduce marketing budgets and drastically reduce operating costs. This helps us to increase revenue even though the situation is much more difficult now ,” said Tencent CEO Ma Huateng.
In fact, despite the decrease in revenue, if some expenses and effects from mergers and acquisitions are excluded, Tencent’s profit increased by 10% compared to the previous quarter.
Tencent’s chairman, Martin Lau, said the business has stopped many non-core activities such as online education, e-commerce and online games. The company also reduced marketing budgets and limited investment in many areas such as expanding new users. In the second quarter of 2022, Tencent’s marketing budget decreased by 21% year-on-year.
At the same time, the Shenzhen-based company also announced that the number of employees decreased by 5,000 in the first quarter of 2022.
Head of Strategy at Tencent, Mr. James Mitchell, believes that with these strategies, businesses will be able to regain profit growth over the same period last year, even though the macro environment is still as challenging as it is today. even if sales don’t grow.
Source : Genk