Tencent’s copy strategy
To summarize, entrepreneurial capitalism is the system we believe is most conducive to radical innovation. But no advanced economy can survive only with entrepreneurs. Big firms remain essential to refine the radical innovations that entrepreneurs have a greater propensity to develop. One area for future research is the optimal mix of entrepreneurial and large firms. But as you can read from the article, one of the disadvantages of big-firm capitalism is that firms in oligopolies can be lazy, living off their cash flow without innovating, and can leverage their power in one market into other markets, thereby stunting the growth of new technology and handicapping the entrepreneurs who could commercialize it. Here is a vivid example that shows large firm lacks of innovation. In China, Tencent is a famous Internet company established in 1998, the time that Internet industry began development in China. At that time, there was an instant messaging computer program called ICQ, which was developed by Israel Company. As ICQ didn’t have Chinese version, so Tencent developed the software called QQ, which has the same function as ICQ dose and, most importantly, it has Chinese interface. It’s not difficult to imagine how popular it was at that time. So Tencent attracted more and more users by providing QQ software and related services. It’s so important to have as many users as possible for an Internet company cuz the number of users is the king in this industry. So at this point, Tencent is the most successful Internet Company in China since it has the largest number of users. At 8 PM, Mar.5th, 2010, Tencent announced that over 100 million users were communicating on QQ concurrently at that time. That is a huge number! However, it’s also the point where problems come.
It seems that Tencent knows its strength clearly. What Tencent did in the past decade was nothing else but copy. If you list all the software that Tencent provides, you’ll find...
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