China’s Grip over Tech Firms Impact Top-Line Revenue Growth


Tencent Holdings has announced an 8% revenue growth for the fourth quarter of FY2021, the lowest top-line growth since it went public in 2004.

“China’s vice-like grip over the country’s technology firms continues to impact their top-line revenue growth.” said Benher, Analyst at GlobalData.

“Tencent’s business, like other tech firms, has been impacted by stringent regulatory environment, which impacted how business is conducted online, including overseeing of Internet advertising (down 13% during Q42021), and controlling online sales, apart from minor protection measures rolled out in China. The halt on new game approvals has also negatively impacted Tencent. The period also witnessed the company’s market value slipping from a high of $948bn in January 2021 to $365bn by mid-March 2022.”

“However, Tencent unveiled a slew of strategic measures that it believes will keep its business in good stead, with favorable tailwinds such as the release of new game monetization licenses expected in 2022. Strategic initiatives taken by the company in the recent past include content enhancement, better user experience, continued game development, focus on market penetration and enhanced payment ecosystem, among others.

“Tencent actively pursues these initiatives as seen by the company’s job postings, which have been on a northward trajectory since mid-2020. The company expects its strategic initiatives to offset the impact of revenue decline arising out of minor protection measures, which triggered domestic grossing receipts to decline 73% for Q4 2021.” said Benher.


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