China’s Economic Downturn Has ByteDance, Meituan, and Didi Operating in Survival Mode

Slowing economic growth spells turbulent times ahead for Chinese internet companies ByteDance, Meituan-Dianping and Didi Chuxing.

Just like China’s mature internet giants Baidu, Alibaba and Tencent (collectively known as BAT), the “little giants” ByteDance, Meituan-Dianping and Didi Chuxing are straining under the pressure from the capital market and the pervasive downsizing. At the same time, they fret about their cash flow as smaller businesses must. Many believe that these tough times will pass once China’s economic pressures are relieved, that it’s just a matter of weathering the storm. The truth is, however, that China’s internet industry is plateauing; the period of rapid growth and enormous profitability has come to an end. How will the little giants position themselves to survive?

To prepare for rough times, ByteDance will expand its advertising business, cut spending and invest smarter.

In 2015, ByteDance made ¥1.6 billion ($234 million) in revenue. ByteDance reinvests its earnings in exchange for high-level growth. As a result, three years later, in 2018, that number became around ¥50 billion as the company sustained a 300...