Earlier this month, the Chinese tech giant ByteDance is widely reported to have secured exclusive ownership of the women’s hospital chain Amcare, based in Beijing. This move saw the owner of the popular social media app TikTok join a number of other prominent corporations which have recently invested heftily in China’s growing private healthcare sector. The overall results of this costly acquisition will only become clear in the long term, but many analysts suggest the shift in strategy might be motivated by political motives instead.

The huge buyout was first reported by Bloomberg last week. In the face of growing competition and government crackdown, the decision to acquire stakes in the critical healthcare sector was apparently made carefully but enfolded rapidly. ByteDance subsidiary Xiaohe first bought a 17.6 % stake in Amcare last year, gradually but swiftly purchasing all the remaining shares within a year-and-a-half. The final cost came at around $1.5 billion, or 0.5 % of the corporation’s recent market evaluation.

A brief look into the context might provide some insight into ByteDance’s decision. Amcare was a privately-owned healthcare chain based in Beijing. According to its website, the company owns a total of seven maternity hospitals, two outpatient clinics, and two post-partum confinement centres across China. Amcare is a renowned name in the industry and specialises in fertility, obstetrics, gynaecology and paediatrics. This gives ByteDance political clout amidst China’s upcoming population crisis as birth rates plummet well below the replacement level for the first time in history.

The Chinese technology sector has repeatedly suffered aggressive political attacks by the ruling Communist Party over decades, a trend that has rapidly accelerated in recent years under President Xi Jinping. But ByteDance also faces unique challenges, due to the massive international backlash against its major international subsidiary ‘TikTok’. TikTok, along with its domestic counterpart Douyin, are suspected of deep collaboration with the Chinese state in its censorship efforts, and has been accused of breach of private customer data. The app has also been banned in India due to political tensions between the world’s two largest nations.

Therefore, ByteDance is not the only household brand that has sought to diversify its activities over the past few years, even as the pandemic saw a dramatic increase in tech demand. Alibaba and Tencent (via ‘WeDoctor’) already maintain online medical consultation apps. ByteDance chimed in with its own healthcare-oriented subsidiary Xiaohe. So far, the investment does not seem to be paying off in sheer economic terms. Competitors Alibaba Health Information Technology and Ping An Healthcare Technology have seen their shares fall by as much as 60 % over the past year, as China continues to slowly reopen its economy while maintaining an absolute zero-COVID policy.

Most of these investments are simply part of a diversification strategy in an uncertain business environment. Stakes in the healthcare sector also help unpopular tech corporations to save face in China’s authoritarian political culture.

Anthony Tilghman

Anthony Tilghman, is an 3x Award-winning Photojournalist, Education advocate, Mentor, and Published Author with years of experience in media, photography, marketing and branding. He is the Winner of the...

Leave a comment