Tencent Cloud Goes Global. My Interview with VP Karl Xu. (2 of 2) (Tech Strategy)

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During Tencent Cloud’s Data Ecosystem Summit, I sat down with Vice President Karl (Huabin) Xu, who has been a key leader in Tencent Cloud’s international activities. This article has my main lessons / take-aways. Here is a short video from that.

Background

Karl Xu joined Tencent in 2004. Which was either an exceptionally great decision or just great luck. Probably both. In the two decades since, Tencent has been an epicenter of digital innovation. It has launched product after product – including QQ, gaming, movies, television shows, one literature, WeChat, payment, financial services, cloud, and many others. It would be hard to think of a better place to view China’s digital evolution.

During his tenure, Karl worked on projects such as QQ, Qzone, and Tencent Video. And he is now working on cloud and AI applications across multiple industries and geographies. He is currently Vice President of Tencent Cloud and is responsible for the pan-Internet business.

Here are my take-aways from our conversation (and from some of his past interviews). These are my take-aways and lessons learned – and are not necessarily his (or Tencent’s) opinions.

Take-Away 1: Going Global Starts with Infrastructure.

During our conversation, Karl mentioned that you start with infrastructure. With traditional cloud, such infrastructure would mostly be compute, connectivity and storage. And there would be lots of focus on stability, scalability and, of course, security. Traditional AI functions within more traditional compute would include prediction and visual applications.

But Generative AI is changing infrastructure dramatically. The shift to applications powered by large foundation models is creating a new tech stack, with lots of new requirements. The good news is this has created a growth wave with lots of customer demand related to AI. The not so good news is there are lots of new infrastructure requirements.

Big foundation models have changed cloud customer needs. The compute and especially data capabilities required for GenAI are massive. Training models in particular requires lot of interactions between multiple machines. With very different data requirements than traditional cloud. Data storage and connectivity requirements are also different. Plus, you need a lot more power (and cooling).

And Tencent Cloud is among a small number of firms that have the capabilities to support clients across the entire AI tech stack. They are global leaders in model development and the supporting tools. But unlike OpenAI and many others, Tencent Cloud can also do the entire data processing chain (data cleaning, data storage, database capabilities and data lake capabilities). And the compute architecture.

All of that makes infrastructure a good place to start.

From Karl:

“Chinese strategy to go global is, of course, to utilize internet as an advantage, as an entry point. So therefore, first of all, our first strategy was to establish a, the public cloud infrastructure. And now as Chinese business are going global more often, now we would like to say that we have established the infrastructure, the structure of how we have, we have succeeded in a preliminary stage”

Tencent Cloud has been steadily building out their infrastructure capabilities globally, with a focus on GenAI activities. Currently, this includes 55 Availability Zones, +3,200 CDN and a growing (but not yet public) number of data centers. All with 24/7 service support.

Take-Away 2: After Infrastructure, You Upgrade and Build Out Products and Services. Leading With Internet+.

Infrastructure is a great entry point. Especially public cloud. And from the presentations at the summit, Tencent Cloud is building their global infrastructure and support services.

But it’s also about adding products and services. And doing lots of rapid upgrades. And the tech paradigm change created by GenAI is a good opening for this.

From Karl:

“The second strategy, which is currently in progress, is Internet+. We would like to empower more industries with Internet+. For example, now in both of these businesses, we have already been assisting retail, and medication, and medicine, and even air services, and travelling services”

At the summit, there were lots of announcements about such product upgrades. And these were mostly about adding GenAI to current products and services.

Take-Away 3: Tencent Cloud International Has Lots of Advantages in Gaming

Karl discussed the different cloud needs of global games. And how GenAI is also changing the industry. He mentioned how upon release, games need international reach (which requires global infrastructure). Plus, you need low latency and high reliability. And lots of bandwidth and compute.

From Karl:

“We know that now a lot of games, they’re released internationally. So, when we try to manage that, we have to focus on different characteristic, different features of the games. For example, when we play games, we hope there will be low latency and high security, just as when we play PUBG. So, these are the things that we will focus on first…the gaming industry is changing very rapidly, and it’s being updated day and night. So, in Tencent, we have a very professional team for AI plus gaming. So, when we go global, we will say that we have this advantage.”

“Another thing that we are very proud of is that, globally speaking, the percentage of China-released games is actually quite high right now. So, this is also something we are proud of.”

The emerging GenAI use cases in game development is also interesting. Such as in designer tools, character creation, etc.

“I have two very good places for you. Well, first of all, it’s in the design stage. With AI plus gaming, we can enable the designer to design the characters very rapidly, and for example, go through the processes like testing, and even character building, and so on. We have a game called FUN PARTY. So, a lot of characters are generated by AI.”

“The second case is skinning. We all know that traditionally speaking, it takes the game developers a long time to skin, to offer the skins to different characters. Now, with the AI technology, we can do this very quickly. We have a Go skinning technology, and it saves three to five times compared with the traditional methods.”

Take-Away 4: The Migration of Indonesian GoTo Was Tencent Cloud’s Defining Overseas Project

I have been particularly interested in where Tencent Cloud is getting traction in Southeast Asia. This region (plus South Korea) is usually the first stop for China giants going international.

In Indonesia, Tencent Cloud has now successfully transitioned GoTo’s entire business to Tencent Cloud. GoTo (GoJek + Tokopedia) is as high profile a project as there is in Southeast Asia. And especially in Indonesia, which is a particularly important market. This recently completed migration was a defining project for Tencent Cloud. It was big news in the region.

From Karl:

“GoTo, this case is something we are very proud of. It’s due to the efforts of our whole team. So, I was in charge of the whole process. So, this is some memory that we really do relish.”

Another Tencent Cloud project in the region I have been watching is with CP Axtra, a retail and wholesale subsidiary of Thailand’s Charoen Pokphand (CP) Group. This is arguably their flagship client in Thailand. They announced a Global Strategic Cooperation with CP in January 2025.

Final Point: Karl’s Advice to Young People

Those are my business take-aways. But I also asked him a bit about his career and what he has learned. Karl has had a really fascinating career. And he is now right in the center of a lot of important things: Tencent Cloud, GenAI, and the rise of China / Asia.

So, my final question was what advice he would give to people just starting out:

“I’ve been in Tencent. So, I also came here fresh out of college. And for a lot of people who freshly graduated from college, I think that the most important thing is that they have to have that overall understanding of the industry. What are the changes that are occurring right now? Like 20 years ago, if you are fresh out of college, you may think about how to make one single software or make a good game. But now, you cannot just focus on one thing. You have to have a very dynamic thinking and have the capability to solve very complex problems and give a very comprehensive solution to things. “

“You have to have a very good insight; right insight is so important. And in past, you spoke about putting your heart to work, but now we have to work smart. You have to be smart in access to information, how to gather valuable information and also have your own judgment as well. You need to be sensible. So now with a lot of the AI technologies, AI models going on, it’s more important for a graduate to have your own judgment.”

Final Thoughts

Overall, I like the international strategy for Tencent Cloud (and WeChat). Here’s my very simple summary of it.

  1. Go international with both products and tech / cloud services.
  2. Lead with infrastructure. And always try to have an advantage. Such as working with Chinese firms going international. Or a changing tech paradigm.
  3. Use infrastructure as a foundation for products and services.
  4. Always be upgrading both the infrastructure and products. And move fast right now. GenAI has opened a window to opportunity to enter new geographies.

Cheers, jeff

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Related articles:

From the Concept Library, concepts for this article are:

  • AI
  • Cloud

From the Company Library, companies for this article are:

  • Tencent Cloud

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I am a consultant and keynote speaker on how to accelerate growth with improving customer experiences (CX) and digital moats.

I am a partner at TechMoat Consulting, a consulting firm specialized in how to increase growth with improved customer experiences (CX), personalization and other types of customer value. Get in touch here.

I am also author of the Moats and Marathons book series, a framework for building and measuring competitive advantages in digital businesses.

This content (articles, podcasts, website info) is not investment, legal or tax advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. This is not investment advice. Investing is risky. Do your own research.

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