FB Pixel no scriptByteDance dissolves investment unit as China reportedly tightens venture oversight for internet firms | KrASIA

ByteDance dissolves investment unit as China reportedly tightens venture oversight for internet firms

Written by Mengyuan Ge Published on   2 mins read

Conglomerates like Alibaba, Tencent, Baidu, and more may follow suit.

ByteDance has dismissed its entire strategic investment arm, 36Kr reported Wednesday, citing a former employee. The investment arm’s staff and its head, Zhao Pengyuan, may be reassigned to the company’s strategic business unit. Moving forward, ByteDance’s investment arm will no longer be an active division of the company.

Chinese media outlets reported that the internal reassignments within ByteDance may be the consequence of new rules drafted by the Cyberspace Administration of China (CAC), the country’s main internet regulator.

The rules reportedly require businesses with more than 100 million users or annual revenue exceeding RMB 10 billion (USD 1.57 billion) to undergo an approval process with the CAC before notices of investments and acquisitions are submitted to China’s market regulator. The CAC has issued a denial, but it is unclear whether the agency is refuting the existence of a document that outlines the rules or plans for new regulation.

A ByteDance representative responding to 36Kr’s report said that the company is strengthening its business focus and redistributing manpower from the strategic investment department into other business lines.

The Chinese tech giant carried out at least 56 investments in the short video, education, e-commerce, finance, and games industries last year, according to data compiled by EqualOcean. Notably, it acquired game developer Moonton for USD 4 billion in March 2021 as part of its expansion into the video game sector. Additionally, it has acquired stakes in talent agencies Yuehua and Mountain Top Entertainment as well as Weisi Technology, an AI algorithm and robotic process automation developer.

Other household names have far more than 100 million users or annual revenue that surpasses RMB 10 billion. This may have consequences for the investment activities of Tencent, Alibaba, Baidu, and many more tech companies that have come to define the ways consumers interact and transact online. And, this may impact their portfolio companies at home and abroad, depending on the CAC’s clarifications and definitions of new investment rules for tech conglomerates.

Alibaba’s major subsidiaries include Southeast Asian online shopping platform Lazada, Hong Kong-based media outlet South China Morning Post, and food delivery provider Ele.me. Tencent is a prolific investor and the largest video game company in the world; it owns Riot Games, holds a 40% stake in Epic Games, and invested USD 150 million into Reddit in 2019.

Brady Ng contributed to this report.


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