Pony Ma: The US is Beginning to Copy China

(Chinese Version)

On May 1st, The University of Hong Kong held the Dream Catchers forum that features start-ups and entrepreneurship. Mr Pony Ma, Founder, Chairman and CEO of Tencent, delivered the keynote speech. The session was also moderated by media celebrity Dr Lifen Zhang.

When asked about reasons why starting up WeChat, Mr. Ma said that it was because they saw a chance of being different. Three years ago, the Internet was hosted on PC, but these three years have witnessed a complete overturn. Now it’s featured on mobile devices. Chinese companies that fail to keep up with this transition trail far away behind.

Even magnate like Facebook once had its stocks down to 70 billion, because customers doubted if it could successfully shift onto mobile devices...

Until recent two years, Facebook put great emphasis on mobile devices and even spent heavilyin acquiring Whats app, because it dared not even the slightest neglect, which could lead to disastrous consequences.

MSN was once the biggest rival of QQ, but eventually it died out.

First of all, it died not because of us but its failure on social media reform. It was defeated by Facebook.

Secondly, MSN’s localization in China was deficient. Its Chinese interface was a mess. Its layout and security are all dragging behind. At present, QQ is used in office and WeChat for entertainment. In the past, MSN was an office tool and QQ an entertainment. In fact, WeChat is sufficient in terms of inspection. Its limits are mostly content and information security related.

Tencent was under great pressure as well. They had three individual teams developing WeChat program at the same time, and only the fastest one would win. Finally, the developing team in Guangzhou won, and the Chengdu team was very disappointed -- they are only one month behind.

When WeChat was first launch, there were only few people using it. Communication operators were very alert, and even planned to announce restrictions on WeChat. Many countries all over the world are coming up with restrictions on apps like WeChat.

Honestly, this trend cannot be stopped. I keep telling them, take it easy, you will be beneficiaries for sure. Your income from voice call service might decline, but internet flow is going to boost. There’s no way you can lose.

When asked about his opinions on Jack Ma, he said they have a great personal relationship. Together they invested in many companies, including Huayi Brothers.

It’s normal to have competition. There’s no need to make a big deal out of it. We’ve all been through trials and errors. When Amazon and eBay rushed in China, Alibaba was tough and won the market share over them. There’s no doubt about this. Government is not to be blamed. 

In terms of the competition between Didi and Kuaidi, Ma said that Tencent supported Didi and Alibaba supported Kuaidi. It was like a fight between kongfu masters. At that time, daily loss can register 20 to 30 million RMB, yet, he was not going to give up. His greatest daily loss even hit 40 million. No side dared to withdraw, otherwise it will lose everything. That’s when we communicated with Jack Ma and merged the business with many moderators of major capitals.

Now Didi faces competition from Uber.  As foreign internet companies keep coming in, who’s to win? Foreign giants or local businesses? Pony Ma was confident that local businesses would win.

Local starters ventured in everything. They can make several decisions a day. In foreign companies, employers need approvals of their boss and there’s time difference in between. Here in China we have capitals and active private equity. I’m very confident about local starters. They are down-to-earth, reflective and take initiatives in trying different methods.

The following is the full text of Pony Ma's conversation with Dr. Lifen Zhang (Former chief editor of FTChinese.com):

Z: In your past interview, a journalist mentioned that your favorite identity is “software engineer”. What do you think about this now?

M: I’m the product manager among all the software engineers. I need to decide on product development and keep track of user experience. This is why I spend a lot of time using our products, especially the core products-WeChat, QQ and email. I’ve found out many bugs in the process and I’m pretty good at doing this. I also found out problems of our latest version 6.2. It has become my instinct. You can actually see how this keep the morale up in our company.

Z: Do you have any tricks to share with as a product user?

M: No. Just keep using the products. Find yourself in a virtual scene of communication and sink in. The most important ability of being a product manager is to turn himself into a fool, who asks why when problems come up, and turn himself to a program developer. One second he’s a fool, and next second he’s a professional.

Z: American rivals of Chinese companies made a comment that Chinese are fast learners and fast copiers. Do you think that Chinese Internet companies has gone past this phase?

M: First of all, we have to admit that the US is a hegemony and has been so over the past decade. American companies are international from the beginning. Database, router chips and the essence of Internet Technology all belong to the US. They are far ahead of us and countries other than the US are all learning and copying after it. But when putting into practice, because of the difference in culture and users’ habit, Chinese companies have created a lot, even better than the US in some aspects. In terms of mobile internet, China has 0.65 billion internet users, among which 0.56 billion use internet on mobile phones (80%). The US only has 0.28 billion and this rate is 60%-70%. China has internet users that are double more than that of America. 

In terms of new products, China and other Asian countries are moving faster. WeChat public account is one example. We saw that Facebook is now working on the similar products. For us, this phase is not a past tense. We will always copy after products that can satisfy our market demands.

Z: China is also copied by the US?

Ma: Yes. (Applause) The US is beginning to copy China.

Z：You mentioned “pinch” a lot. Can you please explain what is a “pinch”?

M: One example is taxation and invoice. If you check-in in a hotel, you need an invoice to submit expenses later. Is it possible that you do this by scanning QR code on WeChat? All invoices are stored in Cloud and there’s no need of printing out. So two minutes after money deducted from my credit card, it’s quickly recharged, leaving no room for the fake invoice. This is a scenario that excites them. Another example is winning lottery on invoices. It’s quite a trouble if someone win a several dollars lottery and want to cash in. I call this a “pinch”. Is it possible that with a scan of QR code we know if we win lottery. If we do, we can share it on WeChat as red envelop (“hongbao”) to our friends, even show it off in WeChat friends circle.

Z: Right. (laugh) It reminds me of the pinching experience when I was fresh back from abroad. Pony, you mentioned that for internet companies, less is more. Another saying commonly used in Media is that: I gamble half of my life for a living. What’s the meaning behind this?

M: It was brought out this year in a Shenzhen summit. The host described Tencent as having half of a life, because we have been downsizing the business, and many of our businesses are run by partners. As a balance, we used the rate of half and half. I figured that a half is even better than a whole. The host commented that others are investing a whole to your business of a half. They are protecting you. This is true. In the past we built up a platform, and now we are aiming at sustainability.

We do things that only we can do, and let those who are capable do the rest. The biggest problem we are facing now is the mindset of business starters and pioneers. A company lacks pioneers is going to fail no matter how big it is. Many business are left in hands of the company starters instead of the employers working for them. We tried being hands off but failed -- it got tangled up.  Some employers questioned us and said you are depriving our initiatives. I said that either you go ahead and do it, or you create a competitive atmosphere. There is no other options. For example, 20% of your game development profits counts as costs. The more people you recruit, the bigger the costs is. You earn stock for yourself.

Z: I remember that several years ago, I interviewed your counterparts – and also your rivals. They commented that Tencent is so well-organized that it doesn’t look like an internet company in the Silicon Valley. They even thought that Tencent doesn't encourage competition. But I noticed that in the past few years. This impression has been changed in markets of both china and abroad.

M: I can’t represent my counterparts, and there’s no precedent before us. To raise an example, we all know that MSN was QQ’s biggest rival. It’s smooth in operation and has no blocks, but eventually it died out.

First of all, it died not because of us but its failure on social media reform. It was defeated by Facebook.

Secondly, their localization in China was deficient. Its Chinese interface was a mess. Its layout and security are all dragging behind. In terms of chatting online, QQ is used in office and WeChat for entertainment. Before, MSN was an office tool and QQ an entertainment. In fact, WeChat is sufficient in terms of inspection. Limits are content and information security related.

Z: What suggestions do you have for Google, Facebook and Zuckerberg?

M: I think the world is big enough to accommodate us (laugh, applause). With rich experience in the past, even if we directly compete with them, we shall still win. Local business as long as it doesn't have capital disadvantage, now can defeat foreign companies, since China now has abundant capital and Chinese companies has great chance of winning.

Z: What do you think of Jack Ma Yun (laugh)?

Ma: I intend no judgement of counterparts today. We actually have a great personal relationship. Together they invested in many companies, including Huayi Brothers. It’s normal to have competition. There’s no need to make a big deal of it. We’ve all been through trails and errors. When Amazon and eBay rushed in China, Alibaba was tough and won the market share over them. There’s no doubt about this. Government is not to be blamed. 

Z: There’s a saying that the first generation of internet pioneers are not young anymore -- they are no longer 28. They are unfamiliar to the needs of Internet natives and corporation management.

Ma: To tell you the truth, we have done nothing wrong but being laggard. The first time we saw Snapchat, its users are kids from 13 to 18. Our executives thought it was stupid, with no values and we invested very little, but it’s been skyrocketing. Our vice president has been to this company, very small, just a glass house on the seaside, as if a rock could break it up. Its value was 20 million USD and we weren’t in the game, but now its value is beyond our imagination, 100 million USD.

Now many investors might need to go back home and ask their kids. Youngsters nowadays are purposefully different from adults. Many youngsters in China are still using QQ. It’s not about technology or humanity, but that they are not willing to be in the same circle with their parents. Similarly, many new things come out. Although we can’t understand them, we have to show respect to them. There must be reasons why they are popular.

Z: Let’s do a brief conversation within 4 or 5 minutes. WeChat has changed interpersonal and even family relationship. When we are having dinner, a circle of people are all playing with phones. We have become slaves to social media?

M: It’s a severe damage to eyes. These few years, I’ve been changing glasses. My necks are damaged, too. I hope to communicate with brain waves in the future. The truth is, we need to look at this in a positive way. We need self-discipline, to control rather than be controlled. We are also thinking about how to filter the information flow in the WeChat friends circle.

Z: Who’s the hero in your mind?

M: I used to dream about being an astrophysicist like Einstein, but I’ve got no chance. There are many heroes in our industry, such as Steve Jobs. He had many insights in terms of a good product. He developed many masterpieces. iOS is an exceptionally smooth system. 

Z: What books are you reading recently?

M: Science fictions, such as The Three-bodies, and some short stories of Liu Cixin.

Z: What games do you play?

M: Mobile games. Tencent’s own games.

Z: Things you want to do most?

M: Artificial intelligence. I hope future electronic appliances can be more intellectual.  For example, the device can check road conditions and protect you by fly around like an unmanned plane. Knowledge of many disciplines are involved in this.

Z: In five years, that is, by 2020, what goal do you and Tecent aim to achieve?

M: We wish to have our products the systematic foundation for lots of enterprises.

Z: Will Tecent become number one?

M: We never consider this, never look at market value. The important thing is whether the thing we are doing is meaningful.

Z: This is the first time you came to Hong Kong University. Please say something to our students.

M: I think students have many great innovations, and I hope students can stay open and sunny when they graduate from university. Learn down-to-earth knowledge and gain social experience. Don’t set unrealistic goal. Embrace failures. Nobody treat you nice for no reasons. Luck and problems won’t stay forever. Finally, having partners is better than fighting alone.

[The article is published and edited with authorization from the author @Cao Tianpeng, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.