When talking about tech giants in China, many people immediately think of BAT – Baidu, Alibaba and Tencent. They have been the key forerunners in China’s tech development, including digital payments, cloud computing and artificial intelligence (AI). But the mobile age has given rise to a new generation of tech legends, including one of the world’s most valuable unicorns, Beijing ByteDance Technology Company. Founded in 2012 in Beijing by Zhang Yiming, ByteDance now has a valuation of US$30 billion, making it one of China’s fastest-growing tech startups.
Compared with the BAT biggies, news and entertainment app company ByteDance is relatively low-key and not well known outside of China. However, you may have heard of its flagship news-aggregator app Toutiao. Its full name is Jinri Toutiao, which translates as “Today’s Headlines.” Short-video app Douyin, known outside of China as Tik Tok, video-sharing platform Xigua and AI selfie app Faceu are other popular products developed by this emerging firm. According to Liu Zhen, ByteDance’s senior vice-president for corporate development, the company’s estimated 2018 revenue stands at 50 billion yuan ($7.8 billion) and in five years’ time it expects half of its revenue to come from overseas. ByteDance isn’t shy about its plans to grow aggressively at home and abroad.
Let’s explore its flagships Jinri Toutiao and Douyin in detail before getting to its global business approach.
Launched in August 2012, Toutiao is a news and information distributor backed by artificial intelligence. With 120 million daily active users, the app sends customized content to readers, based on their location, clicking and browser history and even their phone model. The company itself does not create any original content. As revealed by Liu Zhen at The Wall Street Journal’s D.LIVE conference in Hong Kong in April 2018, 90% of the content on Toutiao is moderated via AI. This tech collects daily news from media partners and selectively pushes recommendations to users’ homepages. As a result, each user sees different headlines as per the app’s motto – “The only headlines are those you care about.”
Building on this success, Toutiao has dipped its toe into social media, incorporating a mini-blogging feature, “Wei Toutiao” (mini headlines), into the app. Users can open an account and publish photos, text and video in Wei Toutiao, where the user interface is pretty similar to Facebook and Twitter. People can share their daily life and subscribe to the official accounts of celebrities and brands, such as Chinese actress Angelababy and news media outlet CCTV. It’s a social media feature independent from its news dissemination service.
Apart from social media, Toutiao also supports two video platforms, Xiqua and Huoshan, because of the popularity of video content. According to marketing research firm Trustdata, as of March 2018, Xiqua had 110 million monthly active users while Huoshan had 140 million. Xiqua is a video-sharing platform which is similar to YouTube, where users share how-to videos, parodies and memes. Huoshan is famous for live streaming and creative short clips of a broad range of content from makeup before and afters and funny dancing to fishing and farming. Liu Zhen revealed that 50% of the time people spend on Toutiao is spent watching videos and video consumption is expected to grow rapidly in 2018.
Many people aren’t aware that popular short video streaming app Douyin was also developed by ByteDance. The app recently became the world’s most downloaded non-game app in the iOS App Store, according to market research company SensorTower, achieving 45.8 million downloads in Q1 2018. Another report shows that Douyin had 130 million monthly active users as of March 2018.
Unlike Huoshan, which targets second and third-tier cities, most of Douyin’s users are from first- and second-tier cities and 85% of them are below 24 years old. Douyin’s content is often entertaining and appeals to a more trend-savvy audience. The app also provides special effects for users to enrich their video content.
Douyin’s signature is challenges … which are basically hashtags. Users can generate content with reference to the instructions under a particular hashtag. For example, one trending challenge is #superpower. Users are asked to use the app’s “time effect” to rewind their video and make time go backwards as if they can time travel. So people have been spilling water and sending stacks of papers flying all over China. Other common content includes lip-synching, finger dancing and before-and-after makeup transformations.
Given its popularity, many brands are looking to Douyin as a marketing channel to reach China’s Gen Z consumers. For instance, brands can initiate contests using a challenge, such as inviting users to shoot themed videos related to the brand in exchange for prizes. Both international beauty brand Origins and Chinese cell phone brand OPPO have promoted their new products through challenge campaigns.
ByteDance has ambitious expansion plans outside China. Founder and CEO Zhang Yiming announced at the company’s sixth year-end gala in March 2018 that the company wants to become a global content creation and communication platform and that they will focus on globalization this year.
ByteDance recently attracted notice in the West after acquiring Musical.ly, the mobile app that’s very popular among young people in the US Topbuzz, the English version of Toutiao was also launched in North and South America three years ago to expand its global presence. The rising giant also bought France-based media aggregation service News Republic in 2017 and invested in Indian news app Dailyhunt in 2016.
Outside of news aggregation, ByteDance also wants to increase its market share in video platforms and mobile entertainment apps. It acquired US video creation app Flipagram in early 2017. Then in November 2017, it invested $50 million in Live.me, a successful mobile streaming app that’s focused on the US market.
By rolling out its own products and acquiring others, ByteDance has successfully amplified its global presence to grab market share in Japan, India, Southeast Asia, Europe, North America and South America. Yet the brand itself is not as well-known as the top three – BAT – locally or overseas. Many people have only heard of their apps and can’t connect them to their parent company. As a result, in April 2018, Toutiao confirmed that they will use “ByteDance” from now on as the brand name for external communication and marketing. This is an obvious signal that ByteDance is gearing up for branding and firmly establishing its image as an industry leader in China’s tech scene and beyond.
This article <The Emerging Tech Giant that You’ve never heard of> was originally published in Asia Times, written by Ashley Galina Dudarenok.
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