On January 28th, 2019, ByteDance signed the strategic cooperation agreement with Haikou government in Beijing. According to the agreement, ByteDance will set its regional headquarter in Haikou, Hainan.
Hainan is the only China Pilot Trade Free Zone (CPTFZ) province in China, while other CPTFZs are districts and regions in different provinces. Haikou is the capital city of Hainan and contributed GDP of CNY 151.05 billion, which is 31.26% out of province’ 2018 GDP CNY 483.21 billion. After becoming a pilot trade free zone and also the biggest since 2018, Hainan has been actively promoting itself to attract global business partners and investors and in May 2018, Hainan launched the 100-day event to show its openness and hospitality. In January 2019, Hainan held the first entrepreneur consultation annual conference at Sanya city. During the conference, Jack Ma (MA Yun, 马云), the chairman of Alibaba Group board, Pony Ma (MA Huateng, 马化腾), the chairman of Tencent Holding board, NING Gaoning (宁高宁), the chairman of Sinochem board, ZHOU Qiren, the professor of Peking University, and LIANG Jianzhang (梁建章) are appointed as committee members of the conference.
ByteDance’ cooperation with Haikou could be regarded as a step of ByteDance’ going-out blueprint. In the meantime, Haikou plans to advance information technology and 5G technology-related development. The join of ByteDance is an important event in Haikou’s planning and conforms to the province’s interest. Hainan is one of the only two provinces in China that set 2019’s GDP goals higher than the year of 2018 while other provinces are more conservative in the forecast.
ByteDance can open a regional headquarter at somewhere else, but it decided to set the office in Haikou that lies in the south-end province of China. ByteDance is headquartered in Beijing, where gathered most IT companies including Tencent, Sina, Baidu, JD.com, and so on. Despite the capital status of Beijing, Beijing has the densest human resources in China as top-tier universities can offer new blood to local startups and enterprises. Location of a company might be a restriction for it to find the best talents, but if the company’s name is big enough, followers will come to wherever it is, just like Google and Microsoft.
ByteDance has become a company that has thousands of followers, even Hainan is less in human resource density, followers will come to the south end of China for professional development. But why it chose Haikou? ByteDance unveiled its global strategy in Digital China Summit in April 2018. CEO ZHANG Yiming (张一鸣) stated in the summit that ByteDance would march in the global market by providing integrated product experience and build an international platform for creation and communication. As stated earlier, Hainan is a pilot trade free zone and is friendly to global business partners. Setting a center in Hainan can reduce some border-related costs from multi-dimensions for ByteDance. Plus, Hainan’s geographical advantage is an addition for ByteDance when making the decision.
Hainan office enables ByteDance to get physically closer to its global market, South Asia and Southeast Asia. According to Sensor Tower’s data, Tik Tok, ByteDance’s star product, is the No. 1 download in iOS AppStore’s short video category. From global wide, Tik Tok user number increased by 75 million at a YOY of more than 275%, and the number boomed even more surprising in India market: India Tik Tok download increased from 2017’s 1.35 million to 2018’s 32.03 million at a growth rate of 2384%. The boost of global user number may accelerate ByteDance’ globalization pace.