TikTok becomes a case study for Chinese companies planning global expansion

Zhang Yiming’s new year’s resolution in January 2017 was to “learn English well,” according to a private WeChat Moments post seen by the Post. He was sharing what he called his “dream” among close friends and aides – and made the point by adding in English: “I mean it!”

Eleven months later, Zhang’s company ByteDance purchased video app Musical.ly in a deal that would give him a platform to venture into global markets. It would also sow the seeds of future troubles, but serve as an important lesson for other Chinese companies looking to enter Western markets.

TikTok has found itself in a complex geopolitical situation during “the lowest point” of Sino-US relations since the two countries established diplomatic ties in 1979, according to Wang Yong, a professor at the Peking University School of International Studies. The US now “views China as its main competitor [and] targets Chinese hi-tech companies in particular”, he said.

Following a review of its Musical.ly acquisition by the Committee on Foreign Investment in the United States (CFIUS), Washington ordered the divestment of TikTok’s US operations from its Chinese owner ByteDance, citing national security concerns. But updated export controls issued by Beijing in late August – which covered two key technologies used by the short video app – added more uncertainty to the sale.

On Monday, Oracle emerged as the front runner in the contest to reach a deal with TikTok after Microsoft Corp said its offer for the video app had been rejected by ByteDance. The decision to pursue a partnership with Oracle rather than an outright sale has also kicked the ball back into Trump’s court. The US president had ordered TikTok to close its US operations if an American buyer could not be found.

But why did TikTok become the next target after Huawei Technologies, the Chinese telecoms giant crippled by US government sanctions over similar national security concerns?