China's Tencent signs broad cultural deal with Britain

By Eric Auchard

LONDON (Reuters) - Chinese internet giant Tencent signed a trade deal with Britain to work with its cultural industries, deepening cooperation between the two countries and setting the stage for its own further international expansion.

Tencent said the initial focus of the Memorandum of Understanding (MoU) it has agreed with the UK Department of International Trade would be on film, video games and fashion, which it will bring to its large domestic audiences in China.

It will cover digital, cultural and creative projects with the BBC, British Fashion Council, Visit Britain, the country's tourist promotion board, and technical publisher Springer Nature, known for titles such as Nature and Scientific American.

Tencent, China's second most valuable company, runs the country's biggest social network, music and gaming systems.

Its billion user-strong WeChat messaging app sits at the heart of China's booming internet economy, yet the company remains largely unknown to Westerners outside of technology or financial circles.

Financial terms were not disclosed. Britain's Secretary of State for International Trade Liam Fox and Tencent Senior Executive Vice President Seng Yee Lau announced the deal at an event in London on Wednesday.

"The next few years offer a golden opportunity for the UK to work with companies such as Tencent to drive innovation and shape the future of global trade," Fox said at the ceremony. "We look forward to turning this ambition into a reality.

Lau told Reuters in an interview the British government trade deal gives Tencent a "landing pad" into Europe, starting with its planned creative industry partnerships while also leading to further commercial and investment prospects in time.

"BUBBLING WITH IDEAS"

"This is a land bubbling with ideas, its traditions offer appealing cultural content. It is a land of opportunities".

So far, Tencent's international expansion strategy has consisted of making it easier for Chinese tourists to use its services when travelling overseas, rather than creating localised versions of its apps for non-Chinese audiences, said Raj Rajgopal, president of digital strategy consultant Virtusa.

The popularity of Tencent's WeChat app stems from how it melds messaging, social networking, e-commerce, media and gaming features in one place that a billion Chinese consumers use on their smartphones from morning to night.

Outside of China, Tencent has made scores of international investments in ecommerce, payments and gaming firms. Its biggest move in Europe has been to acquire majority control of Finnish mobile games site Supercell in an $8.6 billion deal in 2016.

In 2017, Tencent Video, a Netflix-like streaming video service in China, jointly produced the blockbuster nature documentary "Blue Planet 2" with the BBC. It has reached more than 220 million viewers worldwide since it was first broadcast.

The MoU features a three-year deal between the BBC and Tencent Penguin Pictures for joint production, content development, commercial licensing, promotion and distribution of documentary films.

Working with Visit Britain, Tencent plans to create a new version of its "QQ Speed" racing game for mobile phone users with British characters, costumes and music. It also will work with Oxford University to host games and courses designed to promote the development of the e-sports industry, it said.

Tencent said it will become the exclusive strategic partner of the British Fashion Council working with fashion designers, supplying technology and hosting fashion events online.

In an earlier Britain-China trade deal announced in late 2017, Tencent said it was working with the Royal Opera House on joint performances and technology.

(Reporting by Eric Auchard in London, editing by Louise Heavens, William Maclean)