TikTok Sister Douyin Dismisses Plan to Foray into Fund Distribution

BEIJING, July 26 (TiPost)— Douyin, the Chinese short video platform and application owned by TikTok parent ByteDance, may consider expansion into a financial business that has attracted tech titans these years.

Credit：Visual China

Douyin recently carried out tests for fund sales participated by a few leading fund management companies, and talked with some companies about the possible business mode that can be adopted based on ecosystem of the popular short video app, learned China Fund, a digital Chinese financial news media outlet. The preparatory work for fund distribution has been done and Douyin is waiting for its sales qualification to be approved, the media outlet reported, adding that Douyin has already approached many mutual funds and reached agreements on distribution with these funds.

Any applicant for a fund sales license has to work with some fund companies to do tests for their application, and Douyin is conducting tests with major fund managers for sales preparation when TikTok sister has completed relevant technical adjustments, the report cited a person familiar with the matter. Various hardware and software preparations have been rushed out, including creating related business management systems, establishing a platform of the fund distribution system and completing the system development and training about business trials, the person added. Douyin was reported to plan to team up with fund managers for sales of money market funds initially, then gradually expand into sales of non- money market funds.

The report noted Douyin’s application for fund sales license can be traced back to 2018, though the regulator has not given green light yet for various concerns such as China’s tightening regulation on the internet industry, potential financial risks brought by the popular online platform. It is said that Douyin has speeded up its preparation since the company introduced personnel from the regulator to be responsible for sales license application and related business.

Douyin did not apply for a fund sales license nor did any tests with fund managers, people at the company told state-backed securities newspaper Securities Daily later. However, tapping into fund sales has become a trend for Chinese internet giants these years.  

Distributing funds used to be a very lucrative business for banks in China as the market was dominated by major state-owned banks. The landscape started changing in 2012, when the China Securities Regulatory Commission (CSRC) widened sales channels and began to issue licenses to third party fund sales companies. Alibaba’s fintech unit Ant Group is one of the first applicants that successfully obtained CSRC’s license to do fund distribution. Subsidiaries of other major internet companies like Baidu, JD.com, Sina were also approved as the qualified distributor since then.

Douyin’s new attempt for fund distribution, if it does have, is in a more business-friendly environment. Earlier this month, China’s financial regulators announced end of a years-long regulatory revamp on Alibaba’s fintech affiliate Ant Group with nearly US$1 billion in penalties. At a meeting held on the heels of announcing the milestone of Ant later, Chinese Premier Li Qiang called on online platform operators to better empower the real economy, create jobs and proactively fulfill their social responsibilities.

The Communist Party of China Central Committee and the State Council last week released a guideline to boost the private sector, suggesting Beijing focus more on private businesses, especially internet companies, to revitalize economy.

The guideline proposed a series of measures to help private companies to increase their international competitiveness. It also asked for regulation with an aim of a healthy development of the private capital. The government will lead platform economy to a development direction featuring openness, innovation, and empowerment, support platform operators in creating jobs, increasing consumption, and international competition, and promote a sustainable and healthy development of the platform economy, according to the guideline.  

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