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Wed 11 Sep 2019 09:40 AM

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TikTok owner ByteDance is a $75bn Chinese tech giant - how will it approach the Middle East?

The Middle East region, with its young, tech-savvy population, is high on the list of ByteDance's expansion plans

TikTok owner ByteDance is a $75bn Chinese tech giant - how will it approach the Middle East?
ByteDance's most popular app is TikTok, where users share short videos.

ByteDance is now one of the most valuable private technology firms in the world, reportedly worth $75 billion.

Founded in 2012 by tech entrepreneur Yiming Zhang, the Chinese behemoth owns more than a dozen apps including news aggregator Jinri Toutiao, trending video platform Top Buzz and selfie app FaceU.

But the company's most popular app is TikTok, where users share short videos.

As of March, TikTok was the third most downloaded app worldwide for the first three months of this year, according to market research firm Sensor Tower. 

The video platform hit 1 billion downloads worldwide in February, Sensor Tower said, of which nearly 100 million came from the US and 250 million came from India.

Global expansion ambitions

ByteDance is trying hard to diversify its business, through international expansion and other new business initiatives in domestic markets, such as smartphone, online education, e-commerce, instant messaging. 

The Middle East region, with its young, tech-savvy population, is high on the list of the company’s expansion plans. 

“ByteDance’s official regional launch of TikTok on January 1, 2019 with a one minute light show ahead of Dubai’s annual fireworks display on the Burj Khalifa is “probably the boldest brand activation ever successfully executed by a tech company in the MENA,” said Wes Schwalje, COO of Dubai-based research firm Tahseen Consulting.

“TikTok is particularly popular amongst Generation Z in the GCC with social media market increasingly becoming segmented by demographic cohort — Generation X and Y are avid users of Facebook and Twitter while Generation Z are heavy users of TikTok, Snapchat, and Instagram,” Schwalje added.

According to the expert, the UAE and Saudi Arabia are critical markets for social media companies since they make up over 70 percent of GCC digital ad spend.

The UAE and Saudi Arabia are also bellwethers for what is likely to become big in other markets in the MENA, Schwalje predicted.

Aggressive plans

Rohit Talwar, a prominent London-based futurist, said given the potential growth of the tech sector and education market in the Middle East region, ByteDance can be expected to pursue a "very aggressive" strategy.

“Alongside forming a range of alliances and partnerships with existing players in the region to create channels to market and accelerate penetration, I would expect to see them going after particular segments with acquisitions, aggressive marketing, and pursuit of key opportunities in strategic markets such as education and developing localised versions of their key social media platforms such as TikTok for social videos and Hello for news that they have taken into India already,” Talwar said.

Walid Mansour, managing partner and CIO, Dubai-based VC firm Middle East Venture Partners (MEVP), told Arabian Business that he believes ByteDance has already conducted a market study of the MENA region and met with key digital and e-commerce companies. 

“We at MEVP have played a role in facilitating those introductions. We haven’t seen any M&A or strategic partnership activities yet, but we do believe this is the most effective way to enter the region. Our region is big yet fragmented – local tech companies tend to outperform established foreign players due to their deep understanding of their target audience,” he said.

PK Gulati, a Dubai-based tech entrepreneur and investor, said he believes the opportunity for ByteDance in the Middle East is immense if the company customises its products for the region.

Gulati pointed out that TikTok was temporarily banned in India and fined in the US, for virally forwarding inappropriate or offensive content.

“In response they now have moderators and some content restriction controls in some countries. If ByteDance manages to takes care of the sensitivities that this region by using moderators and better algorithms, they will be able to grow in the region,” he said.

“The Middle East is home to many young people who have good quality mobile phones and access to good quality data; they consume a lot of videos and make a lot of videos. The market is ready for ByteDance."

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