Recent media reports from China suggested that Facebook is looking to enter the country even though it is currently blocked. The reason, it turns out, is that local Chinese media misunderstood a job posting by Watercooler, a Facebook application developer active in the country.
And, yet, we hear whispers that Facebook traffic is growing in the country.
First, the Facebook-China rumor mixup, as described by Marbridge Daily:
According to the sources, Watercooler, a U.S.-based developer of social games for Facebook which recently set up China headquarters in Beijing, posted a recruiting notice seeking staff for “development of social games for Facebook”, meaning “for games to be featured on Facebook”. The posting was apparently misconstrued by a popular Chinese gaming industry portal as indicating that it was Facebook itself that was recruiting for a new China office. Other Chinese news media then reportedly republished the story or variations of it.
The basic reason why Facebook would be looking at entering China is that it is by far the largest market that Facebook has little or no presence in. The company has been thinking about it for years, we’ve heard consistently (and unsurprisingly). It bought the domain Facebook.cn, although that URL doesn’t display anything, and the purchase could have easily just have been a defensive move to protect against domain speculators.
Between heavy censorship, ownership laws, other regulatory complexity, massive local competition, a potentially global public relations nightmare and a range of other issues, Facebook would likely face substantial obstacles if it tried to more aggressively enter the Chinese market. At least that’s the few of people we talked to in China thought. There is no middle ground between working with the Chinese government or against it; we’ve heard that Chinese censors blocked Facebook within 72 hours of when its Simplified Chinese translation became available, for example.
In the meantime, the country currently has 61,000 monthly active Facebook users out of a population of more than 1.3 billion — around what it has had for many months. It’s not clear how accurate that number is, as privacy software typically changes IP addresses and other information to identify users as coming from somewhere else in the world.
Still, if any outside web company has a shot at getting market traction in China — aside from all the major issues, above — Facebook is probably it. Although the company has not made headway in countries with distinct business and cultural barriers with strong local competitors, including Russia, Japan and Korea, it has grown everywhere else. It’s still too early to know how many local competitors can hold their own against Facebook’s internationally strong position in the long run. But at this point, these countries appear to be islands in a Facebook ocean, and the water is continuing to rise.
Mainland Chinese users are separated by censorship, dialect and taste from Chinese speakers in many other parts of Asia and the world. Yet it is possible that the large number of Chinese-speaking Facebook users (not to mention the Chinese-language games and other apps) could help make the site interesting to mainland users if they could get access.
Facebook has been getting big in Chinese-speaking parts of Asia, including Taiwan, Hong Kong, Singapore and other major cities. As of the beginning of this month, there were around 85 million monthly active Facebook users in the region, according to our Global Monitor Report – available to Inside Facebook Gold members – up 75 million from last month. We don’t have specific numbers on how many of those users are using the site in Chinese, but there are certainly many. Facebook is getting more focused on the Southeast Asian market, at least, recently beginning to post job listings for a new office in Singapore, likely focused on sales.
Now, here’s some on the record thoughts on the possibility Facebook entering China. Here’s Beijing-based Kaiser Kuo‘s view of Facebook’s PR problem if it somehow worked with the government to enter the market:
Whatever the real reasons for Google’s actions, the dominant narrative is says they stood on their principles and defied a censorious regime. Any move Facebook made that involved bowing to Chinese censorship would bring down the indignant wrath of every rights organization you can name. Facebook’s already a lightning rod, and critics are always ready to jump all over it for so much as an unpopular interface change. Imagine what they’d do if a hypothetical Facebook China hired a team of in-house censors, like their Chinese competitors are obliged to have, and started scrubbing every positive mention of Google, like Kaixin001 and Renren were compelled to do just a few weeks ago? Putting user information on Chinese IDCs would be asking for trouble, too: Facebook would be legally obliged to turn over personal information to Chinese law enforcement, just as Yahoo! had to do in the Shi Tao case. The late Congressman Tom Lantos called them “moral midgets” for that, you may recall.
And then there’s the competition issue. More, from Kuo:
Even if Facebook did decide to bite the bulled on censorship-related issues and go ahead with a push into the PRC, critics be damned, it’s difficult to see what they could really offer Chinese users that they aren’t already getting from Chinese social networks like Renren, Kaixin001, QZone and 51.com. These sites have real momentum already, and users have built out extensive networks. They’re already awash in social games and innumerable other apps. Many Chinese users already belong to multiple SNSs. Granted, there would be tens or even hundreds of thousands who value connectedness with an international network and would therefore see real value in Facebook. But we’re talking about a market where you need tens of millions of users to be a real player.
Another China watcher, Bill Bishop, proposed a different strategy that might be more worth Facebook’s while:
Instead, provide free VPN and other filter-bypassing services. A meaningful number of Chinese users will flock to your products if they can access you easily. You will then have a decent base of Chinese users which, given your sophisticated ad-targeting capabilities, you will eventually be able to monetize, with a much higher margin than if you were operating in China.
The topic of censorship leads us to the other item we heard: Facebook is actually growing in China, but through mobile devices. The government is somehow censoring out whatever it feels appropriate via the existing mobile censorship apparati it has with those companies. From the China-based people we’ve spoken with, however, no one can access Facebook via mobile devices and no one has heard this rumor.