World's most valuable start-up ByteDance slashes 'lucky money' for Year of the Pig as founder warns of challenging 2019
- Founder Zhang Yiming asked employees not to be disappointed with “much smaller” bonuses
ByteDance, the world’s most valuable start-up, slashed the amount of bonus it gave employees before the Lunar New Year, with founder Zhang Yiming becoming the latest of China’s technology industry leaders to warn of a challenging year ahead.
It is customary for many companies to give some form of discretionary bonus to their employees in the form of “red packets” for the Lunar New Year, the most important holiday in China. While discretionary, many employees have nonetheless come to expect the “red packets” as part of their formal pay.
This was likely on Zhang’s mind when he urged his staff not to be disappointed by the “much smaller” amounts they will receive in this Year of the Pig.
Without disclosing the amount, Zhang called on ByteDance employees to keep striving with a positive attitude as this year is set to post very big challenges, brought on by an “outside environment that is more difficult, complicated and turbulent”, he said in an email to staff on Wednesday.
Shrinking bonuses and Zhang’s warning of a grim year are the latest signs of a so-called tech winter in China, where talks of lay-offs and hiring freezes have gained ground in what was once one of the country’s fastest-growing sectors. The industry, especially for start-ups, is driven by investors looking to back the next big thing. That wall of money has slowed amid a slowdown of the world’s second-largest economy, exacerbated by a trade war with the US.
Baidu chief executive Robin Li Yanhong warned earlier this month that “winter is coming” as China’s economy shifts to a lower gear. Baidu competes with ByteDance for online advertising income.
ByteDance’s Zhang, 35, admitted the company’s business growth in 2018 was not as rapid as it used to be, attributing to the outside environment, competition and mistakes in management, according to a letter verified by the company.
Founded by Zhang in 2012, ByteDance is reportedly valued at US$75 billion, ahead of Uber Technologies in the global rankings, after attracting backing from SoftBank Group Corp, KKR and General Atlantic. Those metrics may have softened amid talks of “down rounds”, or fundraising at a lower valuation than the previous round, among China’s start-ups.
The six-year-old company has evolved into a multifaceted content empire spanning short video app TikTok – known as Douyin in China – and other platforms for news and humour to celebrity gossip.
Douyin’s monthly active users in China alone has exceeded 500 million as of December, pitting it against Tencent Holdings’ WeChat platform with its 1 billion users.
Despite being a rising star in the global tech scene, ByteDance has faced regulatory pressure in China since 2018 as the government tightened its control over China’s cyberspace.
The regulatory headwinds are likely to continue as Chinese authorities have recently introduced new short-video rules that hold app developers accountable for publishing inappropriate content.
Companies such as ByteDance also face rising costs as they have to employ an army of in-house censors to review content before publication.
