Byte Dance plans to double its China business to resist U.S. pressure to sell TikTok

On July 16th, a ByteDance investor said its parent company, ByteDance, had told some investors that it planned to focus more on growth in the Chinese market in the face of a threat to ban TikTok in the United States,media reported. This is by expanding into new areas and trying to develop a new and popular app. Despite growing international pressure on TikTok, Byte Dance’s Business in China is booming.

Byte Dance plans to double its China business to resist U.S. pressure to sell TikTok

The growth came mainly from its Chinese app series, including Shake sound and today’s headlines. In the first quarter of this year, ByteDance had advertising revenues of More than Rmb40bn ($5.7bn), according to people familiar with the matter.

While Byte Dance is once again focusing on expansion in China, Byte Dance founder Zhang Yiming is unlikely to consider selling TikTok at this point, according to a person familiar with the matter. ‘Mr. Zhang is still determined to build a global company, and the sale of TikTok will also pose a real problem: outsiders can access ByteDance’s computer code and its content recommendation engine, ‘ the person said. Another person familiar with Mr. Zhang’s thinking said Mr. Zhang was reluctant to give up the value of TikTok, which had been built through a long-term effort by Byte Dance.

In the past few weeks, ByteDance has faced a rapidly changing global environment, especially for TikTok. First, the Indian government has banned dozens of Chinese apps, including TikTok, and then U.S. government officials raised the idea of considering a ban; and then, on Friday, Amazon sent an email to all employees asking them to uninstall TikTok from their phones, suggesting that U.S. companies could speed up the ban on TikTok. Although Amazon later changed its name, Wells Fargo, the Us bank, and various U.S. government agencies issued similar directives.

Just a few weeks ago, ByteDance shares were valued at more than $120 billion in secondary markets, up from $75 billion at the time of the previous round of financing, according to the company’s investors. But investors are also considering the impact of the U.S. ban. Byte Dance is expected to sell or initially raise shares in 2022, according to some, and valuations could be reduced by 30 per cent as a result of the ban.

At the same time, executives are keeping up with the Latest comments from the White House, and morale is low. According to insiders, some managers at ByteDance believe that TikTok has a 50 percent chance of being asked to pull out of the U.S. market altogether.

The result will be a devastating blow to TikTok’s revenue. According to estimates, nearly half of TikTok’s revenues this year will come from the US and are expected to be between $1 billion and $1.4 billion, up from $200m to $300m last year.

TikTok has about 50 million daily users in the United States. By comparison, Snap’s U.S. daily life at the end of March 2020 was $88 million and its first-quarter revenue was $315 million. If Snap had a market capitalisation of $35 billion, TikTok’s U.S. business could be worth about $20 billion.

Earlier,media reported that Byte Dance was rapidly building a new company and otherwise separating TikTok from its parent company. Options include the establishment of TikTok headquarters overseas (the company has major offices in the US, UK, India and Singapore) and an independent board of directors between ByteDance and its overseas subsidiary TikTok.

ByteDance is understood to have separated its business from its overseas subsidiaries, positioning servers overseas and saying it would not share data with China. Most notably, the company hired Kevin Mayer, a prominent US corporate executive, to lead TikTok’s global operations. Kevin was responsible for the growth of Disney’s video streaming business.