The Emerging Regulatory Regime and the Global Expansion Strategy Shifts of Chinese Online Platforms: A Case Tencent in Europe

Abstract: 

The rise of the platform economy has triggered regulatory responses globally (Kenney and Zysman 2016; Kenney et al. 2021). In the last year, China has taken a leadership role in imposing regulatory limits on its domestic online platforms. The regulatory change is affecting the platform management strategies as well as the globalization investments of Chinese online giants. Using Tencent as an example, this paper illustrates the relationship between the regulatory change and shifts in platform expansion strategies. As gaming and social networks are increasingly regulated in domestic China, Tencent is turning to the global market to grow. Two distinguishing characteristics are identified in our paper. First, Tencent’s investments in the gaming industry have shifted from mobile games to PC and console games, suggesting a shift from importing global games to satisfy domestic demand to a model that emphasizes serving international consumers. Second, Tencent has accelerated the building of data centers internationally, providing cloud services to game producers, nearly all of which have received investments from Tencent. Interestingly, the preponderance of the new investments has been in Europe, suggesting a geographic change of Tencent’s global expansion due to the deepening rift between the US and China. 

Author: 
Publication date: 
October 18, 2021
Publication type: 
Working Paper