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TikTok in Brazil Zhengxin LIU Yushan LI

Introduction TikTok is a social media video app for creating and sharing short videos. The app was launched in 2017 by ByteDance, for markets outside of China. ByteDance, this Chinese company had previously launched Tik tok for the China market in 2016. TikTok and Douyin (Chinese name) are the same but run on different servers to adapt the different application store. TikTok is for the oversea users and Douyin is for the Chinese mainland users. TikTok was the most downloaded app in the US in October 2018, the first Chinese app to achieve this. As of 2018, it is available in over 150 markets and in 75 languages. So we can see that Tik-Tok has achieved a great business success worldwide in a short time. That’s why we are very confident with the decision of accessing in Brazil market.

External analysis  

Macro environment of Brazil (PESTEL) 

Political factors Brazil is the most powerful country in South America. It is also considered a middle-power that has moderate influence in international affairs. Being one of the largest democracies in the world has offered Brazil huge potentials in many fields. It has the potential to become a superpower in the future. Brazil is a member of several international organisations and unions like World Bank, World Trade Organization, the G20, and BRICS (Brazil, Russia, India, China and South Africa). etc. But corruption is one of the biggest problems in the country. It is very rampant and hardly is there a sign of cessation. Economical factors Brazil is the 9th largest economy in the world. It enjoyed a strong growth between these years. Many forecasts suggest that the Brazilian economy will grow in 2019 and will continue to do so in coming years. As a key part of the BRICS group. It has undertaken a number of initiatives to encourage foreign direct investment into the country.

Social factors Brazil is one of the most diverse countries in the world. It has a total population of approximately 208 million. However, the gap between the rich and the poor is still widespread. Criminal violence is also a major area of concern for the country.But the middle class is rapidly growing in Brazil. Brazilians love football, music, dance and plastic surgery, which is quite correspond to what the TikTok user have：the passion of life. Technological factors Brazilians are among the most enthusiastic users of social media in the world, and approximately 50% people are engaged in online activities of some sorts. In fact, Brazil has the 5th largest number of mobile phone and Internet users in the world. It is also the largest ICT(information and communication technology) market in Latin America. Brazilians prefer using mobile phones or communicating with family and friends. Many multinational companies are also heavily investing in Brazil’s ICT sector. Environmental factors Brazil is one of the most beautiful countries in the world. The Amazon River and Rainforest, Iguaçu Falls and hundreds of famous spots attract millions of tourists every year. Tourism sector is rapidly growing in Brazil and contributes immensely to the economy of several regions of the country. Legal factors While Brazil encourages foreign direct investment in general, it puts restrictions in certain sectors, and private security and transport is either restricted to Brazilians only or subjected to the authorisation of the Government of Brazil.

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Distance (CAGE analyse) 

Culture distance Folk etiquette Social —

The Brazilian people are straight and lively, lively, humorous, and joking; they use hugs or kisses as a meeting ceremony, and special formal events shake hands with each other as a meeting ceremony; there are also unique meeting gifts such as a clench fist ceremony, a closet bisous ceremony， etc. This is not the same as the greet with NIHAO(hello) in China. Brazilian culture is more enthusiastic and cheerful. ReligionBrazil is the world ’s largest Catholic country with 180 million Catholics. The religious atmosphere is very strong, and the religious emotions are also very strong. FoodI mainly eat western food. Because of the developed animal husbandry, the proportion of meat in food is relatively large. Brazilian black beans are one of the staple foods of Brazilians. From social etiquette, we can see the cultural differences between Brazilians and Chinese. This requires us to pay more attention to the recommendation and classification of short videos. In Brazil, we also need to pay attention to the scale of videos, such as the relative openness of culture and society. Consideration of acceptance. Brazil is also a country where most people believe in religion, which is very different from China, so religious culture is also an aspect to be considered. Economic distance According to statistics from 2017, Brazil's per capita GDP is around $ 9821.4. At present, the middle class has gradually become a major component of Brazilian society, and its purchasing power and consumption power are considerable. It is more noteworthy that the Brazilian people's ability to pay in installments and habits are relatively low. Strong. In addition, Brazil's financial infrastructure is relatively complete. Currently, Brazil has nearly 200 million credit cards opened and used. Frequent information asymmetries have led to outside investors' lack of knowledge and confidence in Brazil. In addition, issues such as security, political corruption, and inefficiency are also issues that foreign investors need to pay attention to. Brazil's credit market has a lot of room for development, but it also comes with risks. Policy and regulatory risks are the main risks that Brazilian fintech companies need to face. The banking industry is severely affected by policies in Brazil, and new regulations and restrictions will have a greater impact on the market. Due to the lack of sound laws and regulations of fintech companies, investors have always lacked sufficient confidence in this industry. After the introduction of relevant laws and regulations in 2018, fintech companies can develop and operate healthily under the supervision of the Brazilian Central Bank, bringing more confidence to the market. As of September 2017, there were more than 300 technology and financial companies established in Brazil, mainly distributed: payment (32%), financial management (18%),

credit (13%), investment (8%), crowdfunding (8 %), Internet insurance (6%), debt settlement (5%), and other types (10%). More than 60% of these startups are concentrated in the areas of payments, financial management and credit. Mobile-based credit business has become a new hot spot in Brazilian finance. It is estimated that by 2019, nearly 80 million people in Brazil will have smartphones, half of which can cover 4G networks. It is worth noting that Brazilian web users spend more than 3 hours per day on social media. Due to the frequent use of social media by Brazilian users, the model of embedding mobile financial services in popular social applications will be the next trend and gradually integrate into the daily lives of Brazilian consumers. Geographic Distance Because Tiktok is an online product, geographical factors cannot directly affect his problems, so we prefer to analyze Brazil's Internet distance. Analysis of Brazilian Internet Users In China, Internet usage can reach as high as 72%. The rapid popularity of short videos is inseparable from the penetration rate of the Internet, so it is also necessary to analyze the Internet usage rate in Brazil. So the internet users in Brazil are growing rapidly and are expected to reach 100 million by 2015, currently ranking fifth in the world. Male to female ratio of netizens in Brazil 49: The proportion of netizens aged 51, 15 to 44 reached 70%. Netizens are concentrated in higher income groups and in the central and southern provinces. The coverage rate of mobile phone users has exceeded 130% in 2013. Brazilians go online to socialize, search, read news, and shop. SNS is the longest time spent by Internet users in Brazil and it is growing rapidly. The growth potential of e-commerce is gradually being released with the popularization of the Internet and the improvement of basic functions such as payment and logistics in Brazil. Growth of Brazilian e-commerce The online shopping population has a high coverage rate, which is close to 50%. E-commerce sales in Brazil are growing at an average annual rate of 15%. The main e-commerce websites in Brazil are: MercadoLivre, Americanas, Netshoes, Submarino, Dafiti. Among them, MercadoLivre is the largest C2C platform in Brazil; there are physical companies behind Americanas and Submarino, both online and offline; Netshoes and Dafiti are vertical e-commerce. The characteristics of Brazil's local e-commerce are: selling branded products, same prices online and offline, high taxes leading to high prices, universal support for installment payments, and logistics are all fee-based services, and the costs are high.

Buyers in Brazil are basically white-collar workers, aged 25 to 36, college degree or above, intermediate English level, monthly income of 700-1500 dollar, and 3-4 years of cross-border online shopping experience. For buyers, cheap price is the most important, but if the style is not popular, he will not buy it, so Brazilian buyers have their own personality. Category preferences are: clothing, accessories, sports, shoes and bags, beauty salons, toys, 3C accessories, etc. The style is leaned to the American country style, simple and generous. I like more tight-fitting clothes. Accessories like exaggerated and colorful. The style must keep up with the trend, such as big-name elements, the same TV protagonist and so on. Pursuing product texture requires sellers to pay attention to the effect of pictures. Some points to note: 1. Brazilians, especially women, have a wide lower body. 2. Free shipping buyers like it. 3. Like to talk to the seller, don't like the seller not online, even if the seller's English is not good. 4. Look at reviews from other buyers during the shopping process. 5. Facebook recommended to friends around the meeting. 6. Like to participate in promotional activities.

Administrative distance Brazil and China established diplomatic relations on August 15, 1974. Since the establishment of diplomatic relations, China-Pakistan friendly and cooperative relations in the fields of politics, economy, trade, science and technology, and culture have developed comprehensively. Because of China's One Belt One Road policy in recent years. The economic development plan of the new Brazilian government and China's "Belt and Road" initiative are highly consistent with each other, and they can be fully docked to promote the deep development of Pakistan-China relations. Although Brazil and China are far apart, the economic and trade exchanges between the two countries have become closer and closer. China has become Brazil's largest trading partner for ten consecutive years. Last year, the bilateral trade volume exceeded 100 billion US dollars. At the same time, China is also one of Brazil's fastest growing sources of investment. The investment stock in Brazil is nearly 70 billion US dollars, which strongly supports Brazil's economic development. Brazil is an open economy, and the new government hopes that the market will play an important role in the allocation of resources. Chinese companies can play an important role in supporting Brazil's economic development. Many Chinese companies have successfully achieved localization and created a large number of job opportunities, working with Brazilian local companies to promote Brazil's economic and social development. So to some extent, there are no political barriers between China and Brazil. Conclusion of the cage Although we have seen Tik-tok's overseas expansion for just over a year, we have achieved great results, but we must also clearly see that there are still large

differences between Chinese and Western cultural practices. As a content social product, especially foreigners lack Chinese-style "humor", their expression is often very direct. The differences in thinking make many foreigners do not understand why so many Chinese people go to shoot "fake funny videos", they do not understand and do not like those so-called "connotations, boldness, "Funny" videos, and sometimes even consider them illegal and offensive. Among them, Tik tok was blocked by Indonesia on July 3, 2018, which fully reflects this problem and needs to be paid great attention. Therefore, in order for Tiktok to further gain people's hearts, it is necessary to do well in localized operations. Fully consider the local people's living habits, cultural habits and customs, design and promote content that meets local customs, pay attention to the quality of the content, comply with local laws and regulations, and continue to innovate independently. This can help products and companies go longer Make sure the vibrato is Born to be global. Porter 5 forces 1.Threat of new entrants In the Internet world, new entrants will appear at an unpredictable speed and in an unpredictable form at any time. For example, the emergence of TikTok divided up the original Snapchat and Instagram story market share. After TikTok has gained wide attention worldwide, Instragram will soon launch reels in the Brazilian market to counter TikTok. 2.Threat of substitutes TikTok has innovated the viewing experience of the short video industry with its unique waterfall viewing mode and algorithm. However, it is worth noting that APPs such as kwai are also learning and developing similar models and occupy a large market share. Especially in the future market, there will be Reels launched by Instagram with a huge user base, Vstatus related to What's APP status, etc.

3.Bargaining power of customers In the Internet Industry, we focus on user demand and stickiness (ie retention) for innovative services. In view of the TikTok model analyzed in KSF below, we can find that the stickiness of users is extremely strong, meaning that the bargaining power of customers weak, and as the Brazilian market is an emerging market, TikTok occupies a considerable market share in the market, which also makes consumers' bargaining power lower. 4.Bargaining power of suppliers

We are more concerned about the supplier's market influence (market penetration), data precipitation ability, user loyalty (willingness to use the supplier, frequency of use and satisfaction); TikTok's suppliers are mainly its content Producers, however, in TikTok, everyone can become a customer and supplier, and the creation of content relies heavily on TikTok's design. So the market influence of suppliers leaving TikTok’ is very limited. 5.Competitive rivalry Like we mentioned before, there are a lot of competitors in this industry, the reels of Instagram, Snapchat, Kwai, etc. Though the The competition is moderate.

Internal analysis Key success factor What make TikTok so addicted to people was one word: accident. Short videos require a story to be completed in a short period of time due to time constraints, so stories need to be entered fast. What's more, short videos record the current and happenings around them. The closer you are, the greater the impact on you. Compared to volcanic eruption tens of thousands of miles away, the female colleagues who are usually not so good-looking draw beautiful makeup today, which will attract your interest more. It takes only 15 seconds for short videos to make such a powerful "accident". After watching each video, you want to see if the next one will develop as you expect. The more accidents, the more it will stimulate you to see the next one. For example, there are many fixed routines in TikTok. These routines are provided by the official developer or created by users themselves. For example, a very popular routine on TikTok is, "What is my nationality?" The reason why this routine is so popular is that it contains three unexpected points: Which country might this person be from? Are these countries the correct answer?  

Answer revealed Therefore, with these three unexpected points, a wealth of unexpected combinations can be generated, and homogeneity is avoided to a certain extent. Of course, "accidents" are just one of the hundreds of millions of short videos that only satisfy one's psychological needs.

And TikTok's recommendation algorithm can most effectively recommend the type of content you like, meet your psychological needs, and maintain high-frequency stimulation. Therefore, TikTok's "addiction" are made from the following three kinds of refining. 1.Limited imagination space in short video. 2.Cater the human nature's desire with short and fine stories and high-frequency stimulation. 3. "Recommended algorithm" to strengthen the pleasure circuit Strengths, weaknesses, opportunities and threats of internationalization Strengths： There are no major language and cultural obstacles in this form of music short video, which is convenient for global content integration and sharing； With the big success of TikTok in China, TikTok have a strong capital background to support it conquer the oversea market. TikTok already succeed in India market, and this experience will be quite helpful for Brazil market since those two emerging market have similar charecteristics. Weakness: There are legal restrictions. For example, Zuckerberg has questioned TikTok about the privacy of user content，and several U.S. politicians have questioned how TikTok stores user data. In January, an influential think tank in the United States warned that TikTok could return user data to China and become a tool for intelligence collection by Chinese authorities. Opportunities: Tik Tok is more determined on penetration and growth than on making money out of the application, as at now. This is quite logical for them. In a world where social media is dominated by a few players, penetrating though it could be a painstaking experience.

Time machine theory New profit model: Advertising,

Purchasing links, Virtual coins reward, Music promotion fees. Threats: A lot of tech giant are launching new apps to fight for this short video market, with the users they already have, it might become a huge threat to TikTok.

Strategy of TikTok internationalization and expanding the market share in Brazil Internationalization strategy Leverage higher technology At present, the most popular platform in the short video industry, Snapchat and Tiktok both integrate video production and video distribution in brazil. Users from production content to being seen by consumers are all completed on one platform without fragmentation. Feeling, experience is better. If small companies can't compete with the head companies in terms of traffic, they may work hard on video production and locate tool-type apps. Data mining: Make a new optimized algorithms. Even if the algorithm is re-optimized, the video consumes a lot of traffic, which is still a level of concern for many people. Watching short videos in the wifi scene is still a big scene. Therefore, cooperation with operators is also one of the priorities. Reduce dependence on other platforms Most of the leading companies are concentrated in the field of content-based short video, and there is not a single company in the community-based short video platform. Content-based platforms are weak in social attributes, users have fewer ways to interact with friends, and more content sharing flows into third-party platforms, which is not conducive to user retention. The current product form of Tik Tok video belongs to the "community-type short video app", which emphasizes the interaction between people, and TikTok has a natural social gene, which can contribute to the socialization of short videos. You can know more people around you. Localization strategy Get more music usage rights.

The background music of videos mostly involves copyright issues. In this respect, Tik tok is very powerful. On the surface, it is a video production APP, but music production is also prosperous. Many exclusive music are very...