A view of the headquarters of Bytedance in Beijing in December 2018 Photo: IC

ByteDance will build an innovation business center in Chengdu, Southwest China's Sichuan Province, with an investment plan of 10 billion yuan ($1.45 billion).

ByteDance signed a cooperation agreement with the Chengdu Hi-tech Industrial Development Zone on Tuesday, the zone reported on Tuesday. It is estimated that the innovation business center project will recruit 10,000 employees within 5 years, as ByteDance considers Chengdu to be an important city for its strategic layout in southwest China.

"ByteDance is blocked from going abroad by the US, thus it must shift some of its funds and resources to the domestic market and make strategic adjustments," Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times on Wednesday.

ByteDance's TikTok, a video-sharing application, said on Monday that it is suing the Trump administration for its attempts to ban the company in the US. The two executive orders from the Trump administration aim to ban any US transactions with ByteDance 45 days from August 6, and asked ByteDance to divest its interests in the US with a deadline of 90 days from August 14. 

Photo taken on Aug. 21, 2020 shows the video-sharing social networking company TikTok's Los Angeles Office in Culver City, Los Angeles County, the United States. TikTok confirmed Saturday that it will file a lawsuit against the Trump administration over an executive order banning any U.S. transactions with its parent company ByteDance. (Xinhua)

US companies, including Microsoft and Oracle, have been in talks to buy TikTok's US assets. Media reported on Wednesday that Netflix is also understood to have accepted an invitation to negotiate with TikTok's parent company Bytedance.

But analysts said that ByteDance's layout in Chengdu was not only due to external pressure, but also to reap the benefits of development in Chengdu.

"Chengdu is vigorously developing its high-tech zone, providing a convenient investment environment and preferential policies and subsidies. Moreover, Chengdu is an important center for Southwest China. It is a node facing the southwest region, including the western region," Wang noted.

According to Chengdu Hi-tech Zone, Tencent, Alibaba, NetEase, Baidu, iQIYI and other tech companies have already invested in the zone. At present, the hi-tech zone is cultivating more than 90,000 new economy enterprises, 383 gazelle enterprises, and 5 unicorn enterprises. 

Multi-center layout is a common choice for large companies, including Alibaba, Tencent and Baidu. It is therefore reasonable and optimal for ByteDance, which is mainly based in Beijing, to develop another regional center in China, Wang addeds.