Eight months ago, the future of China’s largest internet companies looked grim. Covid-era lockdowns crushed sales, and Beijing’s harsh tech regulations had spooked even audacious China investors. Shares of Alibaba, Baidu and Tencent dropped to some of their lowest levels in several years.
With China’s economy now reopen, the tech giants this week released earnings reports that showed initial signs of recovery. But the financial results, the first issued since the end of “zero Covid” restrictions, also reflected the uneven pace of China’s economic rebound and signaled that the companies’ makeovers, while underway, are likely to be rocky.
Baidu, China’s leading internet search business, and Tencent, owner of the ubiquitous messaging app WeChat, both recorded double-digit revenue growth in the first three months of the year over the same period in 2022, marking the first time in over a year that they had reached that level.
Revenue rose 10 percent at Baidu, which said on Tuesday that strong digital advertising sales had continued into the current quarter. Tencent on Wednesday attributed its 11 percent revenue climb in part to a rebound in digital payments as Chinese consumers began to spend money again after a long dry spell. Tencent, China’s dominant video game company, also benefited from an easing of restrictions on gaming licenses last year after a nine-month freeze.