Dialogue with Tencent's Li Qiang: "Don't engage in low-efficiency internal competition"

Author | Huang Yu

After launching the Tencent Yuan Model last year, Tencent Cloud has chosen "growth" as the theme for this year's Tencent Global Digital Ecosystem Conference.

"Reshaping growth against the trend is the must-answer question for every company today. Only new growth can help companies hedge against the decline of existing businesses and survive through cycles," said Li Qiang, Vice President of Tencent Group and President of Enterprise Business. He emphasized that the growth discussed by Tencent Cloud today is not simply about increasing volume, but about finding solutions with customers and partners for current challenges and paving the way for future development together.

Tencent Cloud has explicitly stated this year that AI, going global, and integrated innovation will be the main channels to help enterprises seek growth in the future. However, facing the increasingly fierce competition in the cloud market, how Tencent Cloud will break through has attracted much attention.

During the media exchange before the 2024 Tencent Global Digital Ecosystem Conference, Li Qiang pointed out that the main business of Tencent Group is stable, ensuring firm investment in the TOB business direction, adhering to long-termism, steadily increasing research and development investment, and avoiding "inefficient internal competition."

Therefore, Li Qiang believes that attention should not be focused on competitors, but more on the broader environment and where new opportunities lie. It is more important to focus on creating a second wave of growth rather than getting caught up in a red ocean market.

Under the three major directions of AI, going global, and integrated innovation, Tencent Cloud aims to identify more opportunities in segmented fields.

Li Qiang mentioned that while real estate may not be doing well, property management is thriving; traditional manufacturing may face significant impact, but intelligent high-tech manufacturing, as well as chip and semiconductor industries, are flourishing; traditional fossil energy is affected, but clean energy has been growing rapidly in recent years.

The key is how Tencent Cloud can find potential directions and blue ocean markets in segmented fields amidst increasingly challenging trends.

Furthermore, in the face of a new round of price wars in the cloud service industry this year, Li Qiang believes that purely focusing on price competition is detrimental to the entire industry. The core is still to enhance the capabilities of the products themselves, ensuring that customers' usage remains stable and secure. Price competition may, to some extent, reduce investment in research and development and related services.

"We cannot afford to cause many accidents due to cost reduction for a period of time."

In Li Qiang's view, a healthy and sustainable business can ensure continued investment in research and development. Compared to price, the stability and security of the product may be one of the most important factors for users to choose cloud services today.

Moreover, Li Qiang observed that price reductions have a relatively small impact on top users, as large enterprises receive much more favorable prices than publicly available discounts. After several rounds of price reductions in the market, it is actually the medium and long-tail enterprises that are more affected.

Nevertheless, to maintain competitiveness, Tencent Cloud must also provide customers with products and services that offer sufficient value for money.

Li Qiang emphasized that Tencent Cloud will not simply follow price reductions but will continue to optimize costs. In other words, the reduction in Tencent Cloud's prices does not come from the prices themselves but from the optimization of the supply chain and the improvement of supply chain efficiency The new war has been ignited in the Chinese cloud computing battlefield, but only cloud providers with truly excellent products can go the distance