While true, that's the lesser of the competitive advantages. China's companies are locked in a highly restrictive CCP control box, which they're not allowed out of. That box will shrink further, suffocating the companies as it goes. It heavily limits how they can compete, what they can do, how fast they can move, and those restrictions will keep getting worse. This isn't even the middle part of the craziness that we'll see out of the dictatorship in China. Dictatorships always get ferociously psychotic as they age, hyper paranoid, increasingly detached from reality (nobody dares to tell them the truth, fear of reprisal increases drastically, so the ability to govern gets worse with time). The purges will get worse, the controls will get worse. It'll make it far more difficult for China's big tech companies to operate, they'll be increasingly hamstrung.
The CCP probably won't need to directly hit ByteDance at this point. They've already restrained the company, it got the message as everybody else has. ByteDance will reaffirm that it understands its place in the scheme of things and comply with Beijing's understood wishes. ByteDance was planning an IPO and cancelled it at the behest of Beijing.
The fake cover reason was data security. The real reason is that Xi and the CCP want China's tech giants pulled back home and away from foreign listings (foreign ownership, foreign influence). China ideally wants those listings to be domestic-only in the future.
Had ByteDance pressed forward with the IPO, they would have been mauled with a giant fine and investigated (turned over) as Didi was.
July 12, Wall Street Journal -
"ByteDance Shelved IPO Intentions After Chinese Regulators Warned About Data Security"
"The Beijing-based social-media giant, last valued at $180 billion in a funding round in December, had been weighing an initial public offering of all or some of its businesses in the U.S. or Hong Kong, according to people familiar with the company’s plans.
But the company’s founder, Zhang Yiming, decided it would be wiser to put the plans on ice in late March, after meetings with cyberspace and securities regulators in which they asked the company to focus on addressing data-security risks and other issues, the people familiar with the matter said."
https://www.wsj.com/articles/bytedance-shelvedipo-intentions...