TikTok owner ByteDance, a nine-year-old company created by 38-year-old Zhang Yiming in a small, residential flat in Beijing, is making a full-frontal assault on China’s tech titans as it seeks to gain top spot in the country’s cyberspace realm. It is engaged in a bitter rivalry with Tencent Holdings in social media and gaming; it is competing against Meituan to be the go-to portal to find the best local bars and restaurants; its booming e-commerce business is poised to take share from market leader Alibaba Group Holding; it is competing for online ad revenues with the likes of Kuaishou and other video apps, and it has already defeated many news apps with its groundbreaking media-aggregator Jinri Toutiao. Whether it’s e-payments or online tutoring, ByteDance’s internet presence is growing bigger as its powerful algorithms hoover up an ever-increasing share of China’s mobile phone users. While it is still a relatively small player in gaming and e-commerce, its algorithms and content are expected to help it tag more e-commerce users and gamers. ByteDance’s phenomenal growth has not escaped investor attention and as it mulls listing TikTok’s sister app Douyin in either Hong Kong or the US, it is now one of the most-valuable start-ups in the world at around US$400 billion in the private market, according to a recent Post report. That puts it ahead of the combined value of Ant Group and Didi Chuxing, at current valuations. Value of TikTok maker ByteDance approaches US$400 billion for new investors With a mission to “inspire creativity, enrich life” and uncanny ability to attract online traffic , some analysts say ByteDance can indeed vie for the title of China’s most-valuable internet company. “ByteDance, assuming it is able to stay together as one entity, has the potential to match, and perhaps exceed, Facebook, Tencent or Alibaba in valuation,” said Matthew Brennan, a China tech analyst and author of “ Attention Factory: The Story of TikTok and China’s ByteDance ”. “There’s only so many ways to make money online. The big markets – games, e-commerce, ads – are far from being winner takes all. ‘Traffic is king’ after all and if there’s one thing ByteDance has in spades, it’s traffic,” said Brennan. ByteDance declined to comment for this article. ByteDance’s main advantage is its vast user base. The domestic video-sharing app Douyin alone had over 600 million daily active users as of August 2020, allowing it to profit handsomely from gaming, advertising, e-commerce and value-added services. Meanwhile, it is expanding at a speed that few can match – the company’s global headcount hit 100,000 at the end of 2020. Founder of TikTok owner ByteDance tells employees to stay grounded It has also built a powerful internal structure, with around 10 senior executives each bossing a distinct business area and directly reporting into Zhang. For example, gaming is headed by Yan Shou and education sits under Chen Lin, who previously oversaw news app Jinri Toutiao. Content-driven advertising is still the company’s most-lucrative business. Last year, its revenue more than doubled to about US$37 billion, according to estimates by tech media outlet The Information . Reuters reported earlier that ByteDance’s advertising revenue in China hit about US$27.2 billion in 2020. On the gaming front it announced the acquisition last month of Moonton, a Shanghai-based gaming company founded by a former Tencent employee, for a reported sum of US$4 billion as it moves to challenge Tencent’s stronghold. This came after the acquisition of more than 20 other studios, including Ohayoo – which focuses on casual games and Nuverse – all with the aim of expanding its stable of games into a steady revenue-earner. “Short video is the biggest advantage that ByteDance has in terms of marketing and distribution of its games,” said Daniel Ahmad, a senior analyst at gaming market intelligence firm Niko Partners. While ByteDance is still a small player compared to Tencent in the gaming world – in 2020 ByteDance received two licences for both domestic and imported games compared with at least 18 for Tencent and 21 for NetEase – Ahmad says the company has turned out some well-received titles, such as Jadeite Master , a simulation game that was the most-downloaded game on Apple’s iOS App Store during the Spring Festival period thanks to a “strong marketing campaign on Douyin”. “ByteDance’s biggest challenge will be whether it can create self-developed titles that can be operated successfully over the long term. In a short period of time, ByteDance has been able to build a very capable gaming team that is exploring all aspects of the games industry, including areas such as cloud gaming,” Ahmad said. The Beijing-based company has also been aggressively expanding its e-commerce business, with the help of huge traffic generated from its short video app Douyin. Douyin has banned third-party platform links in its live-streaming channel, in an effort to build its own ecosystem, instead of acting as a channel for e-commerce giants like Taobao and Pinduoduo. The company is gradually building its team for a comprehensive e-commerce unit, including hiring employees for the delivery business and related financial services. Last year, Douyin’s gross merchandise volume (GMV) reached 500 billion yuan, although the majority of deals recorded were processed through third-party e-commerce platforms such as Alibaba’s Taobao with around 100 billion yuan coming via its own e-commerce channel, according to a report by Chinese tech media LatePost . That is still tiny compared with Alibaba and Pinduoduo, which generated about 7 trillion yuan and 1.67 trillion yuan respectively within their own e-commerce platforms for the financial year ended March 2020. ByteDance has disputed the accuracy of LatePost’s figures without elaborating. In Douyin’s sales campaign for International Women’s Day in March this year, the short video app said it generated 13.6 billion yuan in GMV during the period, while female influencers contributed 64 per cent of total sales. At its first ever official promotional event for the e-commerce business last Thursday, the unit’s head Bob Kang said that “GMV is not the top indicator for Douyin’s e-commerce business at this stage”. “We would rather sacrifice GMV to do a good job in the governance and control of merchants and products,” said Kang. Chen Tao, a senior analyst at consultancy Analysys, said ByteDance’s advantage is its content on Douyin and Jinri Toutiao, where bloggers recommend products to users on those platforms in a process that has become much more important in e-commerce. “Platforms like Douyin and Kuaishou will become more influential on e-commerce,” said Chen. Meanwhile, the rise of live-streaming has changed consumer behaviour in China, grooming top live-streamers such as Li Jiaqi and Viya, both of whom are active on Alibaba’s Taobao platform. Known as the “King of Lipstick” in China, Li once sold 15,000 lipsticks in just five minutes. Likewise, Douyin has also cultivated its own live-streamers. Luo Yonghao, founder of smartphone maker Smartisan, sold more than 110 million yuan (US$15.5 million) of goods and more than 48 million people watched him during a live-streaming session on Douyin. “Douyin is taking on the tide of live-streamed shopping commerce,” said e-commerce veteran Li Chengdong, who founded industrial intelligence firm Dolphin. Although live-commerce, a digital and more interactive version of television shopping, is smaller than traditional online marketplaces where consumers just browse items on web pages, it is a promising sales channel with attractive growth potential. Li estimated that live shopping accounts for some 20 per cent of the entire e-commerce ecosystem currently, while the traditional model accounts for the remaining 70 to 80 per cent. To be sure, while ByteDance has proved its ability to win online user attention, it had its fair share of setbacks – at home as well as overseas battles with TikTok. In China it tried to build up an online question and answer community to rival Zhihu, which raised over US$500 million in an initial public offering last month. But the attempt failed and after three and half years of cash-burning the commnity – called Wukong Wenda – ceased operations in February. Meanwhile, ByteDance’s ability to develop a reliable supply chain, a key condition for success in e-commerce, has yet to be tested. Chen at Analysys said ByteDance urgently needs to develop a strong supply chain. “Rapid development of e-commerce will need a solid supply chain as its basis, without it, its e-commerce business will also be less attractive to consumers,” Chen said. Along with other tech giants it is also facing an array of regulatory challenges. The National Office for the Fight Against Pornography and Illegal Publications, a government agency tasked with cleaning up China’s web, in January fined Douyin the maximum penalty for spreading “obscene, pornographic and vulgar information”. And its US problems remain as President Joe Biden finds his feet. TikTok was labelled a national security threat by the Trump administration and ordered to find a buyer – but there has been no update on the fate of its proposed deal with Oracle for several months. And just as ByteDance seeks to expand into other realms, its domestic internet rivals are fighting back. Tencent, for example, has launched its own short-video function on WeChat, the super app with 1.2 billion monthly users, to vie for the attention of China’s netizens with Douyin. But ByteDance founder Zhang seems unfazed by ByteDance’s date with destiny – telling employees on the company’s 9th anniversary in March to keep “an ordinary mind” about its competition and rivals. “I am often asked by people … ‘your business has grown by 100 per cent last year, can it increase by 100 per cent this year?’ to which I usually reply ‘why must my business grow by another 100 per cent?” Zhang said. “We certainly hope to see strong growth, but worrying about growth shouldn’t affect our decisions … we must open our eyes to see changes in the environment, know our users, and make decisions without distractions. If we do this, results will come naturally.”