"US TikTok Shop's Sales Struggles Result in Shift to Chinese Management"

Chinese company ByteDance, which owns TikTok, is swapping out some American workers near Seattle for managers from China. They're trying to recreate their e-commerce success from Asia after sales in the U.S. didn't meet expectations.

The "TikTok Shop" originally aimed to boost its e-commerce business in the States tenfold last year, planning for about $17.5 billion in transactions. But that goal had to be cut back a lot because things didn't go as planned, as Bloomberg reported from sources in the know.

TikTok opened the "TikTok Shop" office close to Amazon, which is its biggest competitor. Meetings that used to be in English are now often held in Mandarin, and managers are communicating more in Chinese through an app called "Feishu," similar to Slack. This shift has meant English-speaking employees have had to rely on translation tools, according to a report from "Qera Tech."

A spokesperson for "TikTok Shop" said they're always looking at their business needs and made recent changes to their team to help things run better. They’re still optimistic about what’s ahead. The company had previously called its transaction goals "inaccurate."

More than 100 workers from the "TikTok Shop" U.S. team have either been let go or left due to confusion in leadership, which has created a tough work environment, say those close to the situation.

Cultural Shift Amid Survival Struggles

The changes happening at TikTok come as the company struggles to make it in the U.S., mainly because of its connections to China.

Last year, a national security law passed requiring TikTok to separate its U.S. operations from its parent company in China or face a possible ban. Lawmakers believe TikTok's China ties could be a risk for American users' safety and security.

Former President Trump had tried to ban the app twice, and there's a new deadline approaching this month for a potential deal to separate TikTok’s U.S. operations, but that could be extended too.

While President Biden was in office, ByteDance said they had no plans to sell TikTok. However, in April, the company said they were talking about solutions for TikTok's U.S. operations with the Trump administration, mentioning that any deal would have to follow Chinese laws.

The "TikTok Shop," which started in February close to Seattle, has required employees to come into work five days a week for eight hours. Now, U.S. employees need approval from HR and their bosses to work from home.

This change stands out when compared to many other big tech firms that still allow flexible work hours, putting a real strain on employees who often have to join late-night meetings with colleagues in Asia after a long workday, according to former staff.

These changes followed a visit from Bob Kang, who heads TikTok's e-commerce globally, to the company’s Bellevue office, where he noticed a lack of attendance during workdays.

The hiring of Chinese execs to run TikTok’s fastest-growing area may make people question the company’s past promises to distance its U.S. operations from China.

After Trump’s attempt to ban TikTok, the company started a security initiative called "Project Texas," promising to keep app data and operations in the U.S. separate from Chinese oversight.

Why "TikTok Shop" Matters

" TikTok Shop" is a big revenue stream for the app, along with advertising, and it’s a key focus for ByteDance. By mixing e-commerce with entertaining content and popular influencers, it's trying to set itself apart from rivals like Instagram and YouTube. The goal is still to compete with "Amazon" in important markets.

To compete effectively, the "TikTok Shop" has brought in a lot of new hires around Seattle over the last three years, searching for people with backgrounds at "Amazon," based on LinkedIn profiles and accounts from those who've worked at both places.

In some areas of the TikTok office in Bellevue, where around 1,000 employees work, the way things operate seems similar to restructured teams at Amazon, sources say.

Start of Changes

However, since January, rising tensions within the teams led by Kang and Nico Lou Bourgeois, who oversee TikTok’s e-commerce in the U.S., have created distractions for employees who often don’t know which orders to follow. The unclear future of TikTok in the U.S. has also affected morale.

The company made some layoffs in April and then a second set in May.

In the first round, Lou Bourgeois was demoted when Mo Qing, a Chinese executive from ByteDance’s Douyin e-commerce platform, came to Seattle to take charge of "TikTok Shop" in the U.S.

After the second round of layoffs, Mo sent an internal message saying Lou Bourgeois would be leaving to look for other opportunities, based on a copy of the message seen by Bloomberg.

These cuts were supposed to boost TikTok’s "efficiency," according to previous employees, but it’s unclear how they determined what efficiency really meant.

In making these changes, ByteDance is bringing in people who know the company's successful strategies from China. The Douyin app, TikTok's Chinese counterpart, has turned into a $490 billion shopping platform. Along with Mo, who used to lead e-commerce at Douyin, six more Chinese leaders were appointed in April, according to another memo from Kang reviewed by Bloomberg.

One big hurdle for the "TikTok Shop" to succeed in the U.S. is that many American users tend to just watch content instead of shopping within the app.

Some sellers in the U.S. have told Bloomberg they’re hesitant to invest in the platform because of the potential risk of a ban.