Custom «Ma Huateng» Essay Paper

According to Ledger 1, Ma Huateng, also known as Pony Ma, was born in 1971 in Chaoyang District, Shantou City, Guangdong Province in China. Ma Huateng was a graduate students of Shenzhen University, who in 1993 received a degree of Bachelor of Science in software engineering (Computer Applications). China Motion Telecom Development Ltd employed Ma after his graduation. Ma started working in the Internet system department as the personnel who was responsible for research and development at a time when the firm was a supplier of these systems to the government of China. Ma later worked for Shenzhen Runxun Communications Co., Ltd. There he worked on research and development just as in the previous company. He later worked with the oversee Internet calling systems.

Ma Huateng was interested in Internet development and often surfed at home. This boosted his knowledge in the field. Later on, the entrepreneur conceived the idea that China was mature enough to have its own instant managing service. It is notable that Internet services came late in China, and Ma was among the first entrepreneurs who saw the potential presented by country’s market. In 1998, Ma, who was in his late twenties, teamed up with three of his friends and founded their own company, Tencent Holdings, Ltd. The company is among the most valuable telecommunication companies in China. With its well penguin icons, Tencent Holdings, Ltd controls the largest instant messaging (IM) service in China and has currently expanded to offer other Internet and mobile services (Celebrity Net-Worth, 1). The company has become a sight for online gaming and dating among other social features and has more than 711  mln active users (Havely 1).

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Ma and his friends started the company by pumping in a capital of $120 thousand, an amount they had primarily accumulated from their activity on stock market. Managing the company in the very first days was very difficult as it lacked experienced employees and was financially challenged. However, the founders crafted ways that saw the company pick up. For instance, Ma served the company in several positions, such as janitor and designer of a website. Despite this, the company faired on well and in couple of years it acquired more employees. This enabled Ma to channel much of his skills and energy to strategic planning for the company, its positioning as well as management. Eventually, Ma was named company’s executive board member of Tencent, chief executive officer, and a chairperson of its board (Ledger 1). Ma Huateng, current Chairman of Tencent Holdings Limited has a net worth of $4.7 billion. This makes him be considered as one of the richest Internet entrepreneurs of all time (Celebrity Net-Worth, 1). Currently, Tencent has Martin Lau as its president while other three core founders hold executive positions in the management of Tencent. The core founders Tony Zhang, Daniel Xu, and Charles Chen serve Tencent as the Chief Technology officer, Chief Information Officer, and Chief Administration officer respectively (Tencent 1). The company currently employs more than 20 thousand people across China, a seven fold increase from the number it employed in 2005 (Havely 1).

Success of the company has largely depended on Ma’s proficiency in entrepreneurship. Over time, Ma has understood Chinese Internet market and the context in which the company operates. Although they begun amidst stiff competition with already existing firms, Ma has maintained the company as the center of attraction to users. Initially, Tencent focused on products that involved text messaging. In 1999, the company launched instant messaging service, OICQ, a product that was later to earn Tencent great success and wealth. At first, OICQ did not hold a big share in the market as it was among many other instant messaging services in China. However, Ma changed the fortune of Tencent when he decided to offer a free download of OICQ. The free download became the center of attraction to many young users and so the company grew quickly and gained much popularity. This led to an increase in demand for the product to an extent that the number of users increased by 5 mln in a year. The increased number of users soon brought problems to Ma as well as to his growing company as it could not provide enough server space to accommodate a huge number of users. To stop the crisis, Ma attempted to have OICQ sold but failed as he could not reach any fair deal (Ledger 1).

Amidst the crisis, company’s hope was rekindled when American venture capitalists decided to invest some money to keep Ma’s young company afloat. It is at this time that the name OICQ changed to Tencent QQ. In order to increase success and popularity of Tencent, as time elapsed, users of QQ were given access to more services that were value-added. These services included ring tones, QQ membership as well as other applications for cellular phones among others (Ledger 1). Introduction of Tencent QQ and popular online multiplayer games, such as League of Legends, QQ Dancer, Dungeon of Fighters, and Cross Fire among others, have greatly increased popularity of Ma’s company. The company earns more than half of its revenues from these gaming services (Havely 1).

Tencent, also known as “the Chinese AOL”, currently encompasses e-commerce, web portals as well as multiple social networks. By 2004, Ma’s company has become the biggest instant messaging service provider in China having about 335  mln users, 74% market share. In the same year, Ma’s net worth was $190  mln. The Time magazine named him a Global Business Influential in 2007. The magazine recognized him for the impact he made on economic and technological landscape of China (Ledger 1). Prior to this, in 2005, Forbes magazine ranked Ma 68^th richest individual in China (Celebrity Net-Worth 1).

Although the value of Tencent has fluctuated over the past years and the company has been on the decline for the last few years, it has remained popular. In 2004, Ma’s company received license to broadcast radio programs over Chinese Internet becoming the first company to offer services of that kind. This program, among others, worked to company’s advantage and by the beginning of 2005 the number of users of Tencent had risen to 150-160  mln active users, thereby becoming the most used IM service in the whole Asia. As other companies resorted to offering free IM service, Ma had to device other ways in order to make Tencent remain relevant and profitable in the market. The company developed extra like Real Tim Xchange (RTX) System, which is IM product meant solely for businessmen in China. RTX was introduced in 2005 and soon gained popularity to be used by 85 thousand companies. The company also increased its profits by issuing license to other Chinese firm, Guangzhou Donglihang, to manufacture products such as toys with QQ as a brand name. By August 2005, the number of registered Tencent users had risen to 438  mln with 173 mln users (Ledger 1).

Firm’s revenues continued increasing, and Ma has strived to maintain the position of Tencent as Chinese leading IM service. According to Ma, partnership between Tencent and other companies, such as Google, has been ideal and has enabled the company to stabilize further (Havely 1). The initial public offering (IPO) carried out Ma’s company was in June 2004 in the Hong Kong Stock Exchange. The IPO was successful and stock prices rose by nearly 60% within a few months. From the beginning of the same year, profits had risen by more than 40%. Ma continued to expand Tencent around its core IM business in order to cope with the increasing competition. He ventured into new areas, such as wireless technologies, in order to help Tencent retain the leading role in Chinese market (Ledger 1).

Despite high entrepreneurial skills of Ma, stiff competition from foreign companies, such as Yahoo and Microsoft, are among the challenges that has faced Tencent. Although the company remained popular, it began experiencing eroding profit margins in 2004 due to increasing cost of development and marketing (Ledger 1). Rapid growth of Tencent has also attracted much criticism across China. Some critics have accused the company of taking advantage of its size and financial prowess in putting out smaller start-ups out of business. The company is said to have perfected copying ideas generated by these small companies and implementing them in the market. Ma’s company has also received negative coverage from Chinese media and even from Chinese blogosphere. On the contrary, Ma termed allegations as unfounded rumors that should be disregarded (Havely 1).

Ma has tried to respond to some of these challenges. For instance, he acknowledged that Tencent has lately embarked to change the strategy it traditionally used in business in order to reduce criticism. The company abandoned tight and closed developmental model that it formerly used to open up its resources to partners across the chain supply industry. For instance, Tencent has opened up the chain supply to small and medium companies within the same industry, similarly to Facebook and Apples App Store. A new system of operation has not only benefited smaller business enterprises, but has also made the company successful. In an exclusive interview with NUS Business School, the Chairman of Tencent affirmed that his main focus was to take the company beyond China to a global platform (Havely 1).

Ma’s company has sustained the pressure from multinationals that it competed with in the market. His success is a product of his understanding on a highly complex structure of Chinese market. This is the factor he argues that the foreign multinational companies have overlooked in their quest to have a bite of China’s booming online economy. The entrepreneur observes that new technologies, which have strong focus on Chinese culture emerge all the time. Therefore, for foreign companies to tap into this market they have to team up with local partners in order to understand Chinese culture (Havely 1). Mr. Ma, who is a chairman of Tencent also serves in ePlanet Capital as a venture partner. The company is a private equity as well as venture capital firm that seeks to invest in clean technology such as Internet services and applications, wireless communications, applications, and e-commerce among others (Insideview 1).

Conclusion

Apart from the skills that Ma had, which saw him rise to be one of the major contemporary entrepreneurs, luck has also played an important role in elevating his status. Ma was sent to training to the United States in the late 1990’s by Chinese telecoms firm where he was working as a young engineering graduate. It is during this period that Ma quickly latched onto emerging new communications technologies by specializing in instant messaging. When the company was almost crumbling, Ma was lucky to have American venture capitalists renew company's hope. As an entrepreneur, Ma has capitalized on utilizing opportunities that came his way. The entrepreneur has worked his career to become the most envied bachelor in China.