Tencent has invested 6.4 billion yuan in Beijing.

Author | Huang Yu

Twenty years ago, when TENCENT went public on the Hong Kong Stock Exchange, it had only a little over 700 employees. At that time, TENCENT was still a young company that had just undergone its "coming-of-age" ceremony, full of ambition.

In its second year after going public, in 2005, TENCENT set up its office in the Yinkeda Building in the west area of Zhongguancun in Beijing and recruited over 300 employees.

Over the past 20 years, TENCENT has experienced rapid business growth, with a total of over 100,000 employees and offices both domestically and internationally, including in Beijing and Shanghai.

On January 23rd, after many years, TENCENT made a significant land acquisition in Beijing, with a base price of 6.42 billion yuan, for the A, B, C, J plots in the north end of Xueyuan Road in Haidian District. The land area is approximately 70,000 square meters, with a total construction area of about 286,000 square meters.

The news of TENCENT's 6.42 billion yuan land acquisition in Haidian quickly became a hot topic on Weibo, and some even speculated that TENCENT's second headquarters in Beijing is coming.

In response to this, TENCENT only told Wallstreetcn that this transaction will mainly be used to meet the company's office space needs and provide a stable and centralized workplace for its employees.

It is worth mentioning that the land acquired by TENCENT this time was a secondary offering. In 2019, Tsinghua Unigroup acquired the land for 6.6 billion yuan, but due to the failure to pay the land development and construction compensation fee for more than 90 days, the land had to be re-offered. After nearly 5 years, TENCENT acquired the land at a price nearly 200 million yuan lower.

This is not TENCENT's first land acquisition in Beijing. In the early years, it acquired the No. 10 Northwest Wangdong Road plot in Haidian District, where TENCENT's Beijing headquarters building was constructed. It was put into use in 2019 with a total construction area of about 330,000 square meters, reportedly the largest single office building in Asia at that time.

TENCENT's Beijing headquarters building is located in Haidian Houchangcun, adjacent to Baidu Technology Park, Sina Headquarters, and NetEase Beijing Headquarters. The intersection where it is located is jokingly referred to as the "crossroads of the Chinese Internet" by the outside world.

According to Wallstreetcn, TENCENT's Beijing branch is the largest branch in terms of personnel among all TENCENT's regions globally. Well-known TENCENT video, TENCENT news, and other online media businesses are rooted here, and almost all business sectors have a presence in Beijing.

In other words, besides its headquarters in Shenzhen, Beijing is likely the city with the most TENCENT personnel and the widest range of business involvement.

With such a large business scale, TENCENT has no less than ten office locations in Beijing. In addition to its self-built TENCENT Beijing headquarters building, it also leases Asia Financial Center, Sigma Building, Yinkeda Building, China World Trade Center, Samsung Building, and others. Currently, TENCENT Beijing employees mainly work in the TENCENT Beijing headquarters building, while others are scattered in various leased office spaces, with Asia Financial Tower being the office location with the largest number of TENCENT employees.

According to data from Cushman & Wakefield, in the fourth quarter of 2021, TENCENT leased 107,000 square meters of space in the Asia Financial Tower in the Olympic area, which is also a historical high in the Beijing office leasing market in the past decade.

Clearly, for TENCENT, building its own office building is a better choice than leasing, given its significant office space needs and ample cash flow. This not only provides stable and centralized office space for employees but also allows for potential investment returns.

Since last year, "cost reduction and efficiency improvement, business streamlining" has been the main theme for TENCENT. Currently, there are no signs that TENCENT is planning to launch new businesses or expand existing ones in Beijing. Therefore, some TENCENT employees believe that the main purpose of building a new office building may be to relocate the business teams currently in leased office buildings.

Currently, TENCENT's most profitable gaming business and the highly anticipated WeChat Video Account are not based in Beijing.

TENCENT needs to establish a benchmark business in Beijing and find the right direction for breakthroughs.

From the first self-built building completed in 2009, the TENCENT Building in Shenzhen, to the recent land acquisitions in Beijing, TENCENT has self-built office buildings in Beijing, Shanghai, Guangzhou, Chengdu, Wuhan, and other cities, which have witnessed the growth of this internet giant.

Land acquisition and building construction are not unique to TENCENT in the internet industry. According to incomplete statistics, by 2023, many internet companies including Huawei, JD.com, and Alibaba have all made land acquisitions, with a total amount close to 9 billion yuan. Among them, JD.com acquired a commercial and residential land in Beijing Yizhuang New Town for 3.112 billion yuan.

From the perspective of land acquisition amount, TENCENT is still at the forefront among these companies, showcasing the financial strength of the current highest-valued internet company in China.

Nowadays, it is mostly these industrial companies with deep pockets that are making large-scale land acquisitions, becoming an important part of local land finance.

Given time, the heavy investment in assets by internet companies may bring even greater value, and the interaction between technology and real estate may sow the seeds for future economic growth.