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ByteDance plans $ 185 billion new business ahead of IPO

(Bloomberg) – Zhang Yiming made ByteDance Ltd. the world’s most valuable private enterprise through a series of successful apps like TikTok that have challenged Facebook and other incumbents on their own turf. His latest target: Alibaba. The 38-year-old AI coding genius on the hunt for the next big issue of ByteDance has set his sights on the $ 1.7 trillion e-commerce arena in China. The co-founder has hired thousands of employees and recruited renowned sponsors like impresario Lei Jun from Xiaomi Corp. to drive what he calls his next “major breakthrough” in global commerce – selling products to consumers through his short videos and addicting livestreams. This effort will not only test Zhang’s magic touch with the app creation and AI magic of ByteDance, but also investor reception ahead of one of the tech world’s most anticipated IPOs. startup is already starting to make waves in a sector long controlled by Alibaba of Jack Ma Group Holding Ltd. and JD.com Inc. It sold around $ 26 billion worth of makeup, clothing, and other merchandise in 2020, achieving in its first year what Alibaba’s Taobao took six years to accomplish. It will reach more than $ 185 billion by 2022. Douyin, the Chinese twin of TikTok, is expected to contribute more than half of the company’s $ 40 billion in domestic advertising sales this year, in part through e-commerce . that they can do virtually any business, ”said Shawn Yang, managing director of Blue Lotus Capital Advisors. “Douyin is not only in commercials, but also in live broadcasting, e-commerce, local life services and research. This leaves a lot of room for the imagination. Booming e-commerce activity could help the company surpass its $ 250 billion valuation when it goes public, countering concerns over Beijing’s crackdown on the country’s internet giants. Preparations are said to be underway for an entry that would be one of the world’s most anticipated debuts. The startup is working with advisors on the offer and chooses between Hong Kong and the United States as its listing location, people familiar with the matter said. While ByteDance doesn’t handle the sales or the merchandise itself, it hopes to sell more listings to merchants, increase traffic, and reduce its business.Read More: ByteDance is supposed to start IPO preparations for them. Chinese assets The social commerce scene in China, where influencers tout products to fans like a Gen-Z version of the Home Shopping Network. The format, launched by Alibaba as a marketing tool in 2016, developed a life of its own last year when Covid-19 spurred demand for home entertainment. Last year, Alibaba’s Taobao Live generated more than 400 billion yuan ($ 62 billion) in gross merchandise value, and Kuaishou Technology’s social platforms hosted 381 billion yuan in transactions, more than double the amount. those of Douyin. to help its e-commerce activity catch up. On a booming night out for the one-year-old company last month, executives explained that the company intends to replicate its success by using AI algorithms to feed user content into online shopping. Scrolling through an endless stream of social content, now more than ever connected to physical goods, Douyin users won’t be able to resist their urge to buy, they said. The 35-year-old Douyin e-commerce chief told an audience of hundreds at the Guangzhou event. “As people get richer, they don’t go to malls or boutiques with specific things in mind, they just buy if they see something they like.” Kang, a former engineer at Baidu Inc. who was poached by ByteDance in 2017, is one of a group of up-and-coming young lieutenants commissioned by Zhang to innovate for the company. He was previously the technical manager of ByteDance’s Helo app, one of India’s most widely used social platforms for sharing content like videos – until the South Asian nation shut it down with dozens of people. Chinese applications last June for national security reasons. As an ecommerce manager, Douyin banned live broadcasters from selling items listed on third-party sites and urged them to open their own integrated stores, preventing competitors like Alibaba and JD.com Inc. from profiting from its traffic. It has grown a customer support team from around 100 to around 1,900 people to fight counterfeits and is recruiting for over 900 other positions to support the business. ByteDance also has an online matchmaking system that helps connect marketers with influencers and their agencies, and it has physical bases in place to host live streamers and merchandise, similar to what does Ali Baba. hosted live broadcasts promoting his Mi TVs and smartphones. Luo Yonghao, a once high-profile entrepreneur who had sought to challenge Apple Inc. with his smartphone business, is another big influencer, transferring over 17 million worth of goods in its very first live stream on the platform. , like Zhou Huang, who created a Douyin showcase for his jewelry business in October, bypassing conventional platforms like Alibaba’s Taobao. Instead of charging platform operators high fees for traffic, she has managed to muster a base of around 20,000 fans by creating videos that offer practical tips like how to choose the right size when shopping. purchasing a bracelet online. “It’s a challenge for brand new merchants like me to attract customers to Taobao,” says Huang, whose Douyin store burst even after just three months. “Sometimes people come to our store not for shopping, but for entertainment. But once we have enough visitors, we can make a sale. »ByteDance lends a hand. In Foshan, Huang and 200 other jewelry sellers are coached on everything from registering a store and marketing to making great videos. Technical support is available 24 hours a day: Huang says that whenever his live broadcast channel goes down, technicians at ByteDance immediately come to the rescue. to the more than 600 million daily users of the platform. The platform – which generates commissions from merchants as a new source of income – aims to have more than a thousand brands join brands like Suning.com Co. this year by setting up stores in Douyin, and this year. number could be multiplied by five. by 2022, the company predicted in an internal memo. GMV could reach up to 600 billion yuan this year before doubling to 1.2 trillion yuan in 2022. Read more: Leak from ByteDance Memo shows successful revenue projections ByteDance’s ambitions are not limited at Alibaba. The company has also started allowing users to book hotels and restaurants through Douyin, offering lifestyle services similar to super apps like Meituan and Tencent’s WeChat. China’s e-commerce foray could offer a leaf drive to TikTok, which has started testing the waters in China. of online shopping through links to WalMart Inc. and Canadian e-commerce company Shopify Inc. In December, Zhang told employees around the world that e-commerce, when combined with live streaming and short videos, offers an even greater opportunity outside of China, according to attendees who asked not to be identified. The company has also quietly built a team of engineers in Singapore to grow TikTok’s fledgling ecommerce operations. ByteDance’s surge in online shopping comes as its other businesses face headwinds. To develop video games, ByteDance bought development studios, but producing blockbuster hits like Tencent Holdings Ltd.’s Honor of Kings could take years and China has already cracked down on the industry in spurts. In online tutoring, regulators have sought to curb the excess marketing and competition is fierce against a large number of deep-pocketed startups like Alibaba-backed Zuoyebang. In April, Zhang’s company was one of the 34 companies ordered by antitrust watchdog to conduct internal investigations and rectify excesses. And although its payments service is only just getting started, ByteDance and its peers have been hit with sweeping restrictions on their fast-growing financial operations following a meeting with regulators, including the central bank last month. . The owner of TikTok is entering e-commerce in China, the world’s largest online marketplace. Alibaba has sidelined rivals JD.com and Pinduoduo Inc. for the past decade, allegedly through practices such as forcing merchants into exclusive deals. Regulators have since imposed a record fine of $ 2.8 billion on Jack Ma’s flagship company and made the eradication of “pick one in two” one of the main goals of its antitrust campaign, creating room for newcomers like ByteDance. The most immediate increase in ByteDance’s e-commerce expansion is advertising revenue, which still accounts for the bulk of its revenue. As the number of merchants increases on Douyin, their marketing spend within the platform also increases. The company predicts that e-commerce could overtake gaming to become the biggest contributor to ad sales. At rival Kuaishou, merchants contributed about 20%, the company said in March. “It’s more about getting a bigger share of ad spend from brands that would otherwise spend money on platforms like Alibaba,” said Michael Norris, senior analyst at Shanghai. AgencyChina-based market research agency “This is where the threat to Alibaba comes from. (Add details of potential SEO location in fifth paragraph.) For more articles like this, please visit us at bloomberg.com Bloomberg LP

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