ByteDance’s Valuation Soars as IPO Date Nears
While China tech is having a regulatory correction, Chinese Capitalism is fascinating to watch. When ByteDance’s CEO stepped down, we knew it wasn’t just a coincidence. The Chinese State has literally taken a 1% stake in the company, along with a crucial board member.
How China organizes its BigTech ecosystem as extensions of the state truly is the next stage of augmented surveillance capitalism. In spite of China’s significant challenges ahead, its centralization has significant advantages in long-term planning for an AI future.
ByteDance’s valuation rose 168% from last year, according to Hurun Research Institute’s newly released ranking of the world’s 500 largest private sector companies. It’s important to note that ByteDance is the world’s biggest private company, and a genius app-maker with a strong future in consumer apps, gaming, digital advertising and likely other verticals such as music streaming and Ed-tech.
That the Chinese State is taking a new approach to Chinese BigTech is crucial in the future of global capitalism, even as American monopolies have even more power during the pandemic. The Information reported that a domestic entity of ByteDance sold a 1% stake to a government affiliate in April.
The deal was also recorded on Tianyancha, a database of publicly available corporate information, as well as the official enterprise registration index.
ByteDance solidifies China’s ecosystem of technology companies that can go global and even with penalties against Didi and Ant Group, these companies are well positioned to gain global market share, and so is ByteDance. China’s influence is only set to grow, even as it has significant challenges ahead to maintain its GDP growth and enable its population to grow into prosperity despite a significantly over-valued housing market, demographic time bombs, a fertility crisis and an aging population.
You can follow news about ByteDance at the SCMP here. ByteDance isn’t just the new Facebook, it’s one of China’s major pushes to consumer data collection globally. The Chinese Government has imposed data privacy rules on its technology companies that of course does not apply to itself, which is pretty awesome and funny.
It’s like the NSA using American tech giants to spy on its own citizens. It’s somewhat inevitable in the new surveillance capitalism.
The State having a more direct impact on technological growth makes sense for China. Beijing was mulling over small shares in private tech firms as early as 2017. The Wall Street Journal reported at the time that internet regulators discussed taking 1% stakes in companies including WeChat operator Tencent, Twitter-like Weibo and YouTube-like Youku. The Chinese State also has a 1% stake in Weibo.
It also has been pressuring Alibaba to sell part of its media portfolio as to not have too much influence over the internal Chinese narrative. How the Chinese State controls public opinion and technological regulation can ensure that wealth inequality that American monopolies have brought there doesn’t happen in the same sense in China, although that is very difficult to regulate.
China needs to find ways to incentivize the youth not to lay flat and not to stop having families and babies for its future GDP balance. It’s not an easy task as the cost of housing and education in its tier 1 cities has become a bit of an impossible dream for much of the Chinese middle class.
As its technology sector has grown and with a limit on how many houses you can own in China, its stock market may become more used as mechanism for investment — even with incredible volatility like we have seen in recent weeks. The regulatory measures are actually good for the long-term implications of what China is trying to create in its unique blend of State run and free market capitalism. Many of its measures are not anti-capitalistic, as the West has framed them.
The deep misunderstanding of China isn’t difficult. Its wolf diplomats are causing tension, its rhetoric is a bit like that of a dictator and its astonishing growth in technology doesn’t seem to have a ceiling. The world fears what China could become and ByteDance is a good example of what is likely in store for American companies.
Companies like Meituan, JD, Xiaomi, Didi, Ant Group, and so many others show startling potential to go global. Those pesky QR codes that American used to make fun of are now replacing restaurant menus finally in the U.S. Only about a decade later.
ByteDance is the symbol of the new China, with TikTok’s app not losing popularity even amid incredible controversy. Political noise does not lesson the growth of Chinese tech companies which are producing much more real innovation than Western monopolies and non-existent startups. While in the West monopolies are suppressing startups, in China they are investing in them. It’s a much more dynamic ecosystem at this point, in 2021.
ByteDance has sold a 1% stake in three entities established by higher regulatory agencies: China Internet Investment Fund; a Chinese media group managed by the Communist Party’s advertising department; Beijing Municipal Government Investment Sector. So what does that actually mean?
China’s leadership will have a direct hand in how technology companies work together and work towards the common goals of Chinese New Nationalism. If the world is likely to have a global government, China is the most likely bet in the 21st century.
It will have to learn how to better work with others and to actually lead and not continue in xenophobic ways. If it takes the path of colonization, which would be a global disaster, it would take over Taiwan and maybe even Australia. It all depends on the wisdom of its leaders.
If it plays the long game, it will focus on economic and technological global market share, instead of political and militaristic goals. As the Chinese technology sector becomes bigger, it runs the risk of treating the international stage with the incredible arrogance of Nationalism, a behavior of the past, not of the future.
Its lack of progressive thinking is the worst political scenario for the future of Earth. Taking too strict a hand in the future of its companies could also prove a failure. The right balance is needed between free market capitalism and State influence.
The fact that ByteDance is nearly ready for a Hong Kong IPO and its valuation has grown so much however is a good sign for a new breed of Chinese companies that are loyal and work with the Chinese State in ways the rest of the world doesn’t yet fully comprehend.
Companies based in Beijing itself have a higher chance of already being among those. This was easy to see with ByteDance as it grew up from being just a new startup, to now a global rival of Facebook among others.
You can see the Top 500 Huran Rankings here. Global capitalism is being centralized in the top companies where their market share is expanding faster in the pandemic than global GDP is and, to an extent, a world of island mafia Capitalism is now a real possibility for the future of global business.
This suggests that wealth inequality will continue to get worse in places like the U.S. and China, even with regulation or antitrust cases. Even with stock crashes, don’t count out China’s growth engine of innovation as China’s startup ecosystem is much more healthy and robust than America’s in 2021.
This means many Chinese startups are maturing today to become the top companies of tomorrow and ByteDance really is one of China’s brightest stars in the making. Its Hong Kong IPO in 2022 or 2023 will solidify its mark upon the world.
Augmented Surveillance Capitalism is not just about AI permeating capitalism but about technology companies working together towards common global aims, that what China is basically achieving with regulation in 2021 that the rest of the world cannot emulate and it’s a distinct advantage for its innovation ecosystem and its ability to curb wealth inequality to lead its people to global prosperity.
The stock market might not like it, but it’s actually better for its people – something the U.S. has totally lost in its own monopolistic version of Capitalism. The West cannot even fathom what New China is, nevermind its technological innovation ecosystem, because the U.S. has never seen anything like it nor can they hope to copy it.
In just a few short years China has made its own Facebook, and that company is ByteDance, a far more innovative company with a far bigger future in gaming and educational technology. What is Facebook but a glorified advertising firm with a monopoly on targeting? ByteDance has better AI and is the best global app maker, marketer and designer of future niche content that young people enjoy. TikTok’s popularity and China’s brand E-commerce superiority, shows how its influence globally will only increase in the 2020s and 2030s.
Chinese tech companies have to be viewed as extensions of the state and I’ve been saying this for years, but it’s only in 2021 where we are seeing how true that is.