Tencent Holdings, one of China’s dominant tech conglomerates, is going to Japan to challenge Amazon and Microsoft in the cloud computing market.
Tencent is shifting its focus to overseas markets in an attempt to maintain its high pace of growth while China’s economic expansion tapers off.
The cloud business brought in 3%, or 9.1 billion yuan ($1.32 billion), of Tencent’s overall revenue in 2018, double the previous year’s tally. However, after Beijing tightened regulations on the game industry and throttled its growth, Tencent began searching for other high-income businesses.
According to IDC Japan, the country’s cloud services market is expected to grow to 1.69 trillion yen ($15.64 billion) in 2023 from 668.8 billion yen last year. Because of Amazon’s and Microsoft’s big head start, Tencent will focus its cloud business on hosting data from game and video-sharing providers in Japan, niches where it has particular strength in China.