Global Triumphs of Chinese Firms: Unveiling the Key Factors Behind the International Success of TikTok, Temu, Shein, and Tencent Games

TikTok Thrives Globally, But What About Other Chinese Companies?

When Americans think of a Chinese company, TikTok often tops the list. ByteDance, the tech giant behind TikTok, initially found success in China with its app Douyin (the Chinese version of TikTok). Eager to go global, ByteDance launched TikTok internationally. At the 2016 Wuzhen Internet Conference, ByteDance founder Zhang Yiming declared, “China is home to only one-fifth of Internet users globally. If we don’t expand on a global scale, we are bound to lose to peers eyeing the four-fifths. So, going global is a must.” His vision paid off: in 2022, TikTok was the most downloaded mobile app worldwide, according to Laura Ceci from Statista.

While TikTok may be the most recognized Chinese company in the U.S., it’s not the only one making waves internationally. Before TikTok, there were giants like Alibaba (Ali) and Tencent. More recently, companies like Temu and Shein have also captured global attention. However, these successes are exceptions rather than the rule. In stark contrast, 8,619 U.S. companies are operating in China, according to China Briefing. This significant disparity raises the question: why is it so challenging for Chinese firms to expand internationally compared to the numerous foreign companies thriving in China? This article aims to provide strategic suggestions for Chinese companies looking to go overseas, drawing on the successes and failures of those that have tried.

While localization is crucial, relying too heavily on this strategy can overshadow other vital factors like innovation, robust business models, and aggressive marketing strategies, all of which are essential for international success.

Indeed. Localization is crucial.

This article does not deny the importance of localization. In fact, its critical role is widely acknowledged by most Chinese entrepreneurs aiming to expand overseas. Strategically speaking, entrepreneurs must be aware of the two primary methods to localize their business.

One effective strategy for Chinese companies going global is to localize their business operations. This approach helps startups accelerate market penetration by adapting products and services to meet local tastes, regulatory requirements, and cultural nuances. When TikTok first expanded internationally, Japan was its initial target. In August 2017, TikTok launched in Japan, quickly rising to the top of the Japanese App Store’s free app rankings within just three months. TikTok’s founding team in Japan rented a small office in Tokyo’s bustling Shibuya district, known for its never-ending energy and high property prices, to kickstart local operations. Initially, the office had only seven members, with three or four being local Japanese. As the team grew, the ratio of Chinese to Japanese staff remained 1:1. This balance ensured that the Japanese team could leverage their cultural insights to create brilliant marketing strategies that rapidly gained popularity.

For example, understanding the shy and conformist nature of Japanese people, they created numerous tags and challenges to encourage users to post similar content, especially in the dance category. These “challenges” motivated users to film videos with friends, making Japanese users feel less conspicuous. Through meticulous local research, they discovered that teenage girls were particularly interested in the product, leading to the introduction of the 15-second challenge — perfect for filming during 10-minute breaks between classes. Additionally, they found that most Japanese music was copyrighted and required payment to access, so TikTok’s local team signed a deal with Avex Group, Japan’s biggest record label, to license 25,000 tracks for users across Asia. TikTok’s initial success in Japan gave them the confidence to expand further into Southeast Asia. From Q3 2017 to Q2 2018, TikTok triumphed in countries like Indonesia, Vietnam, Malaysia, and the Philippines. Indonesia later became a major pilot market for TikTok’s e-commerce efforts in 2021, leading to significant success.

Another effective strategy for Chinese companies going global is to localize through direct acquisition of high-performing businesses in specific markets. ByteDance, for instance, acquired Flipagram in February 2017 for $50 million, a platform that lets users stitch together photos and videos into montages with background music. Later, on November 10, 2017, ByteDance acquired Musical.ly for $1 billion, a platform where users created and shared short lip-sync videos. Such acquisitions promote fast-track market entry, enhance local market understanding, and quickly expand customer bases. Flipagram brought TikTok a global user base and access to copyrighted music. With versions in 37 languages and users in over 15 countries, more than 200 million creators have posted nearly 500 million short videos on Flipagram. Over 1,000 certified musicians, including the British pop band One Direction, have promoted their music on the platform. Flipagram had licenses for millions of music clips under 60 seconds worldwide.

Meanwhile, the more expensive acquisition of Musical.ly brought a younger demographic to the platform. In 2017, approximately 60 percent of Musical.ly users were between the ages of 18–24, which was even 10 percent higher than Instagram. Interestingly, Musical.ly was initially considered a competitor to Douyin (the Chinese version of TikTok). In May 2017, Musical.ly entered the Chinese market under the name “Muse,” but due to poor management, it withdrew after six months. In Summary, TikTok’s global success exemplifies how Chinese companies can thrive internationally through strategic localization, swiftly adapting to and penetrating diverse markets.

Beyond Localization: Other Strategies Must Not Be Overlooked

1) Innovative Product

As the author of the book “From Zero to One,” Peter Thiel explained, “Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1” (Thiel & Masters, 2014, p. 2). The success of many Chinese startups to expand overseas is largely due to their zero to one characteristic. Temu exemplifies this by not merely improving on existing models but by innovating in ways that fundamentally change the marketplace. Temu is a dynamic e-commerce platform that offers a wide range of affordable products, leveraging innovative consumer engagement strategies to deliver a seamless online shopping experience. With a focus on cheap mass production, TEMU aims to provide quality products at unbeatable prices, making it a strong competitor in the global market. Launched by PDD Holdings, Temu quickly gained traction through its aggressive and unique business strategies. Unlike its competitors, Temu started in the U.S. and aimed to dominate the American market before expanding globally. This reverse approach allowed it to focus on understanding and capturing the preferences of Western consumers right from the outset.

One of Temu’s key innovations is its Next-Gen Manufacturing (NGM) model, which connects shoppers directly with manufacturers, leveraging real-time data to produce merchandise with greater precision and reduced waste. This not only cuts down on warehousing and transportation costs but also ensures that products are manufactured based on actual demand, minimizing unsold inventory. Temu’s success can be attributed to its ability to go from zero to one by redefining the e-commerce landscape with its innovative NGM model, strategic market entry, and focus on sustainable, data-driven practices. This approach, combined with an aggressive advertising strategy and a unique shopping experience that promotes discovery consumerism, provides a strong USP that sets Temu apart from competitors and makes it an attractive investment opportunity.

2) Robustness of the Succeeded Business Model

The robustness of a proven business model is key for Chinese firms looking to succeed abroad, and Tencent Games is a prime example. Tencent’s gaming division, which contributes over 60% of the company’s gross profit, shows how financial strength and scalability can drive international success. By strategically investing in global gaming leaders like Riot Games and Epic Games, Tencent not only boosts its revenue but also gains access to top-notch technology and popular game titles, enhancing its global competitiveness.

Tencent’s ability to adapt its model across various platforms — mobile, PC, and console — further illustrates its versatility in meeting different consumer preferences worldwide. This adaptability, along with smart acquisitions, allows Tencent to effectively enter and influence international markets. In essence, the robustness of Tencent’s business model — marked by financial health, strategic investments, and flexibility — highlights how Chinese firms can achieve global success.

3）Aggressive Marketing and Branding

Shein has achieved remarkable success through its aggressive marketing and branding strategies. By dominating social media, Shein leverages an extensive affiliate marketing program that incentivizes users to share their shopping experiences, creating a viral spread of its products. Collaborations with both major celebrities and lesser-known influencers help craft a fashionable brand image, ensuring a wide reach. Shein’s data-driven approach provides deep insights into consumer behavior, allowing for targeted advertising that resonates with Gen Z’s preference for low prices and trendy styles.

Shein’s content strategy combines user-generated content (UGC) and professionally-generated content (PGC) to enhance brand authenticity and encourage spontaneous promotion by users. Frequent updates to their inventory keep the brand fresh and relevant, while engaging promotions and contests on platforms like Instagram and TikTok drive high engagement and visibility. By maintaining a strong online presence and continuously interacting with its audience, Shein effectively captures consumer attention and fosters loyalty, solidifying its position as a leader in the fast fashion industry.

Conclusion

As more Chinese startups and firms achieve success overseas, they will share valuable experiences. It’s crucial for prospective entrepreneurs preparing for international expansion to learn from a variety of firms rather than just copying the methods of one company, such as the well-known TikTok. This essay emphasizes that while localization is important, other factors are equally crucial. By understanding the diverse strategies that have led to success, entrepreneurs can better navigate the complexities of international markets and create their own paths to global triumph.