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Chinese government takes minority stake, board seat in TikTok owner ByteDance’s main domestic subsidiary

  • Beijing ByteDance Technology sold a 1 per cent stake to Internet Investment Chinese (Beijing) Technology in a transaction in late April
  • The government investor is a unit under the state-backed China Internet Investment Fund

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Beijing ByteDance Technology Co, the main domestic subsidiary of TikTok owner ByteDance, is responsible for some of the tech unicorn’s Chinese internet platforms, such as Douyin and Jinri Toutiao. Photo: Reuters
Coco Feng
The Chinese government has taken a minority stake and a board seat in TikTok owner ByteDance’s main domestic subsidiary, which could signal closer oversight by Beijing over the country’s most valuable technology unicorn.

Beijing ByteDance Technology Co sold a 1 per cent stake to state-owned firm Internet Investment Chinese (Beijing) Technology in a transaction in late April, according to Tianyancha, a Chinese corporate registry data service. As part of the deal, a government official named Wu Shugang became a board member of the ByteDance subsidiary.

This business unit “relates to some of ByteDance’s China-market video and information platforms, and holds some of the licences they require to operate under local law”, according to a statement by parent firm ByteDance on Tuesday. The domestic operations of the Cayman Islands-domiciled tech unicorn include hit Chinese short video-sharing app Douyin and news aggregator Jinri Toutiao.

While the amount involved in the government’s investment was not revealed, data from Tianyancha showed that Beijing ByteDance Technology significantly increased its registered capital to 200 million yuan (US$30.9 million) in late April from 10 million yuan previously. Parent firm ByteDance, which did not announce the deal in April, continues to hold a 99 per cent equity stake.

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The transaction was initially flagged by local Chinese media and reported by online technology news site The Information on Tuesday.

Internet Investment Chinese, which was incorporated in July 2019 with 10 million yuan in registered capital, is known as a “grandson” company of the state-backed China Internet Investment Fund (CIIF). The firm is owned 40 per cent by a CIIF subsidiary, with the rest of the shareholding equally owned by an asset management fund under the Beijing municipal government and a company under state broadcaster China Central Television, according to corporate registry data.
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