The tech giant best known for its video-sharing app TikTok has signed a “strategic cooperation” agreement with the Shenzhen government to set up a new Greater Bay headquarters in the city.
Beijing-based Bytedance, which operates several machine learning-enabled content platforms with a total of 1.5 billion monthly active users worldwide, plans to build a research and development center at its new GBA HQ, according to local media. The company will focus on basic research while exploring new commercial applications, and it has promised innovation will flow from the new building.
Shenzhen has already played an important role in Bytedance’s recent meteoric growth. It began as an Internet and AI company in 2012 and by 2017 had already set up a Shenzhen subsidiary for R&D and B2B services.
Today worth around US$75 billion, Bytedance is one of a growing number of Chinese companies setting their sights on overseas markets, including the US. As a core development engine for the GBA and a gateway to Belt and Road Initiative countries, Shenzhen represents an integral part of that expansion plan.
Bytedance needs this expansion plan to work. It is facing increasingly fierce competition in the domestic market, with costs for user acquisition climbing steadily in recent years. But it does have a big base upon which to build. According to data by Sensor Tower, TikTok has hit 1.2 billion downloads worldwide, including 105 million in the US. In Q1, new users of both the Chinese and overseas versions of TikTok came in at 188 million, an increase of 70% over the same period of last year. The growth came mainly from India, in which TikTok currently claims a total of 200 million users.
Critics argue, however, that Bytedance needs to get its overseas user base up to half of its total to be considered truly global. A new headquarters in Shenzhen is a reflection of the company’s strategy for achieving this. The city is cheaper than Hong Kong, but increasingly plugged into international trends and talent via its links to “Asia’s World City”.
The announcement is seen as another feather in Shenzhen’s cap. Besides Bytedance, online-offline ecommerce service provider Dmall, retail chain Wumart and British multinational DIY home improvement retailer B&Q have also recently set up their southern China headquarters in Shenzhen.
Bytedance’s road to globalization
2015:Launched its global strategy
2016:Attempted to acquire the US social news site Reddit. Failed
Early 2017: Acquired the struggling US video-sharing application Flipagram.
End of 2017:Acquired Musical.ly, along with its 60 million US users.