ByteDance’s China Chief Resigns After CEO Seeks Greater Urgency

(Bloomberg) -- The head of ByteDance Ltd.’s China operations is stepping down, a week after Chief Executive Officer Liang Rubo said the company needed to avoid complacency and make up lost ground in the AI race.

Kelly Zhang is relinquishing the post of Douyin Group CEO, a ByteDance spokesperson said on Wednesday, confirming an earlier report in Chinese media. She took on the role in 2020, sharing responsibilities with ByteDance China Chairman Zhang Lidong. ByteDance will not seek to appoint a successor and Kelly Zhang will shift her focus to the video-editing app CapCut, according to a person familiar with the matter, who asked not to be named as the plans are private.

Beijing-based ByteDance, the owner of short-video platforms TikTok and Douyin, needs to adopt a sense of crisis and steer clear of mediocrity, Liang told staff in a companywide meeting at the end of January. He said he saw several organizational problems that needed to be addressed and lamented ByteDance falling behind in the artificial intelligence race kickstarted by OpenAI’s ChatGPT.

“AI technology will greatly disrupt content creation and even lead to new creative tools. We hope to actively explore, fully understand and seize the opportunities,” Liang wrote in a memo to staff announcing Kelly Zhang’s move, reviewed by Bloomberg. He attributed the decision mainly to business development needs and said Han Shangyou, who previously reported to Kelly Zhang, will continue running day-to-day operations at Douyin and report to Zhang Lidong.

Read More: ByteDance CEO Warns Staff Against Mediocrity After Slow AI Start

Kelly Zhang joined ByteDance in 2014 and was one of the few prominent women in leadership posts among China’s biggest tech firms. In her position, she oversaw ByteDance’s products and operations domestically, including Douyin and news aggregator Toutiao. Outside of China, the TikTok business is headed up by Singaporean Shou Chew, who was one of the social media CEOs grilled by US senators last week.

Kelly Zhang’s exit leaves some uncertainty at the top of a platform she helped build into an e-commerce and content force. Douyin started out as a repository for short videos but rapidly grew into an online shopping and social media leader, creating the template for ByteDance’s TikTok Shop overseas. The service is now challenging Tencent Holdings Ltd.’s WeChat for advertising, forcing the larger company to refocus on its own video initiatives, and eroding Alibaba Group Holding Ltd.’s market share in online shopping.

“Kelly Zhang’s performance at Douyin speaks for itself and has led to impressive achievements, so this is definitely not a question of her ability,” said Li Chengdong, head of Beijing-based think tank Haitun. “There shouldn’t be much impact as their business has already become institutionalized. Douyin is already an industry leader.”

Long hailed as the world’s most valuable startup, ByteDance now rivals Chinese internet pioneers like Tencent, with sales surpassing $110 billion last year. TikTok is also the first non-gaming app to bring in more than $10 billion in user spending over its lifetime.

“I am excited to work together with the team members at CapCut to create our own dreams, and to grow in this AI era to draw a fantasy world together,” Zhang wrote in a social media post. “I will continue to use this entrepreneurial mindset to work hard for the next 10 years at the things I am passionate about.”

(Updates with CEO letter to staff and further details on ByteDance plans)

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