Facebook Planning to Open Sales Office in China Where It Remains Blocked

Prasant Naidu
Prasant Naidu Founder, Lighthouse Insights

Posted on May 15th 2014

Facebook Planning to Open Sales Office in China Where It Remains Blocked
Facebook COO Sheryl Sandberg in China.

The next billion users on Facebook will come from emerging markets and from markets where it still remains banned. China, which is home to the world’s largest number of web users is one such country where the world’s most popular social network remains banned.

During Facebook’s 2012 initial public offering, the social network had stated that “substantial legal and regulatory complexities” prevented its entry into China. But looks like things might change in the coming future. According to Bloomberg, Facebook which has been officially banned from 2009 is taking steps to open a sales office in China to work with local advertisers.

Bloomberg further stated that: “Facebook could open an office in China within a year to serve a growing set of customers in the country.” It is also being said that Facebook is in discussions to lease space in Beijing’s Fortune Financial Center, located in the city’s central business district.

Talking to Bloomberg, Facebook Vice President Vaughan Smith said, “Today, our sales team in Hong Kong is supporting these Chinese businesses, but because of the rapid growth these businesses are achieving by using Facebook, we are of course exploring ways that we can provide even more support locally and may consider having a sales office in China in the future.

Interestingly. even though the network remains banned in the country. Facebook has quietly set up a business unit in Hong Kong for selling ads to companies that want to reach international users. A strategy that even Google follows by maintaining a local sales presence in mainland China for years now even after its search operations have been discontinued.

The latest development comes close on the heels of Smith’s revelation at GMIC Bejing that despite being banned in the country, the social network has a ‘rapidly growing’ business in the country.

Smith further stated that,

We have a rapidly growing business in China helping people that are exporting — exporters from China reaching customers around the world. We have 1.3 billion people on Facebook and it turns out that marketing to those people from China works really well.

We also have thousands of developers that are growing their businesses using Facebook to reach customers outside of China

During the event Smith also highlighted that Chinese social mobile gaming firm FunPlus is one of Facebook’s favorite partners, because one of its games has the “highest retention rate of any games on Facebook.”

Opening up a sales office looks much more rational for Facebook in China at a time when Asia is driving sizable revenues to the network. In the first quarter of 2014 Facebook made $354 million, or 14 percent of its revenue from Asia. That’s up from $118 million, or 11 percent, at the time of its May 2012 IPO.

However, Facebook opening up officially once again in China looks like a distant dream for now, unless it joins hands with the Great Firewall of China like LinkedIn recently did prior to opening up the professional network for the country.

Besides, Facebook being banned in the country has also led the successful sprouting of local players such as Sina Corp.’s Weibo, a Chinese service that works like Twitter and the quite popular Tencent Holdings Ltd.’s WeChat, which would compete with WhatsApp, the messaging app that Facebook acquired for about $19 billion. This would mean a direct competition to the local players which China may not be interested.

While Facebook opening up in China may be distant dream for now, COO Sheryl Sandberg’s last year visit to China to oversee Internet controls there leaves us a little hopeful!

Prasant Naidu

Prasant Naidu

Founder, Lighthouse Insights

Founder and Blogger at http://lighthouseinsights.in, Indian social and digital media news.

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