TikTok owner ByteDance has invested RMB 1.1 billion (USD 165.58 million) in online reading firm Zhangyue Technology (SH:603533), or iReader Technology, in exchange for an 11.23% stake in the latter, eyeing a stronger tie-up with the original content developer, according to Zhangyue’s filing with the Shanghai Stock Exchange on Wednesday. The online literature arena, where Tencent-controlled China Literature (HKG: 0772) is a leading player, has recently seen a big push from ByteDance.
Following the deal, ByteDance, via wholly-owned subsidiary Liangzi Yuedong Technology, will pay Zhangyue CEO Cheng Xiangjun and founder Zhang Lingyun RMB 550 million (USD 82.79 million) each. Zhangyue is expected to generate RMB 470 million (USD 70.75 million) in business deals with ByteDance in the coming year. Earlier in March, Zhangyue introduced Chinese search engine giant Baidu as its strategic investor in a new issuing of shares, but the deal was shelved in August, without a detailed explanation.
“The two companies will work together to develop the reading business and strengthen cooperation in content production, commercialization, placement, and operation,” said the announcement. “ByteDance will provide more support to Zhangyue Technology in terms of advertising, commercialization services, content licensing, search, and platform resources.”
Founded in 2008, Beijing-based Zhangyue has over 170 million monthly active users on its platforms, which include its flagship namesake app, which allows users to read unlimited books online or to download them to reading devices, and the Zhangyue Campus App, a similar concept focusing on textbooks.
In addition to online literature, Zhangyue also provides audio books and e-reader devices.
There are early signs of the deep-pocketed ByteDance’s thrust into the field of online literature in China. It operates a reading app Tomato Reading, which claimed 10 million daily active users as of April thanks to its free model. Since the end of last year, it has invested at least six companies in the industry. Among them are Wuli Culture, Xiuwen Technology, Dingtian Culture, Tadu Literature, and Jiuku Literature.
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