ByteDance Covertly Invests in a Beijing-based 5G Networking Equipment Firm
Chinese TikTok-owner ByteDance has invested in a Beijing-based 5G startup, raising questions about the new media behemoth's direction in 2020, and beyond.
Venturing into seemingly irrelevant business fields has become a common phenomenon in China in the last years amongst the country's tech giants. For ByteDance, the major signal in the firm's new hardware arm was signaled last month after its phone-maker acquisition.
ByteDance has invested in a wireless connection solution provider, Yunzhi Ruantong (云智软通), a Chinese news agency announced on December 16. ByteDance would hold 16% of the 5G provider's shares after completion of the purchase, the news further speculated.
EqualOcean has confirmed the news with sources familiar with the transaction who preferred to stay anonymous due to the information restrictions applied by ByteDance regarding the fresh financing. The injection amount has not been disclosed by the sources.
Yunzhi Ruantong defines itself as a "5G solution provider for industry 4.0;" what they actually sell is a wireless device that helps manufacturers build their internal 5G networks, particularly to enable them to operate multiple industrial robots. The sources have not yet defined any motivation for ByeDance that can explain this unusual decision.
ByteDance – aka the world's most valued startup – started as an online news platform in 2012 with its aggregator product Jinritoutiao (今日头条), then transformed its business with its blockbuster short-video product Douyin (抖音), known as TikTok in global markets. The firm has, since the beginning of 2018, entered several other fields, such as education, gaming, retail, enterprise SaaS and so on. Yet, even for such a massive conglomerate as ByteDance, it is unusual to abruptly pour its resources into a manufacturing solution provider.
"Manufacturers used to be dependent on a physical pipeline to operate multiple robotized assembly lines, yet in the near future, Machine-Type Communications (MTC) within 5G is going to play a tremendous role and transform the way we define manufacturing," said the 5G firm's CEO, Ren Jian (任剑), to iyiou.com, the sister publication of EqualOcean. "Some business application scenarios require simultaneous usage of different 5G systems such as mMTC, uRLLC, eMBB – a full deployment of 5G. Yunzhi Ruantong aims to achieve a full deployment service," Jian added.
The 5G upgrading issue is one obvious explanation for the deal. ByteDance is yet another content-driven company that will change its entire infrastructure as 5G shapes the way we consume data. "The company will spend tens of millions to upgrade its databases with 5G compatible ones," said a former ByteDance employee who played a critical role in the company's successful venture into overseas markets.
Another facet to the move may be connected to a desire to follow Google in moving from software to hardware, particularly next-generation phones. In November 2019, the TikTok operator debuted its jointly-created cell phone with another Beijing-based private phone-maker, Smartisan (锤子科技), in a move to customize cell-phones as primarily a video-sharing tool.