Internet & Tech

Wanted: 500 million friends

Facebook’s IPO reignites discussion about its absence from China

He’s worth a bob or two

At long last, Facebook is filing for an IPO. If successful, it promises to be the biggest offering yet by a technology company.

The IPO is also one of the most talked-about topics on the Chinese web, which is a little odd given that Facebook, with more than 800 million users around the world, has been banned from the country for years.

Many netizens took the opportunity to poke fun at the Facebook ban. One wrote on weibo: “A company no one has heard of is going to be listed in the US and apparently, it is worth a lot of money! But I tried to access the site and it came back with an error message. Even with such crappy technology the company can go public. The stock market is very dangerous!”

Others joked that Facebook would face branding problems if it were ever permitted to launch anyway. In China its pronunciation is fei-si bu-ke (非死不可) which translates as “has to die”. Evidently Mark Zuckerberg – who is learning Mandarin – might want to hire a Chinese consultant to improve on that name.

Regardless of how its name translates, the IPO will have big ramifications in China, mind you. If it goes well – Facebook is planning to raise as much as $5 billion – analysts speculate that it will generate interest in other social networking sites, including Chinese ones.

In fact, news of the Facebook IPO had an immediate impact. Renren, China’s Facebook clone, ran up more than 33% on the New York Stock Exchange the week the Facebook listing was announced. And Sina, operator of Weibo, added almost 19% over the same period. “The ‘Facebook’ effect on Chinese internet companies has already started,” Sina chief financial officer Herman Yu told the Wall Street Journal. Yu thought a successful IPO could “further heighten” investor interest in social media, as well as related categories such as social advertising and e-commerce.

But inevitably many investors are asking how (if at all) Facebook plans to connect with the 500 million internet users in China. Judging from the company’s prospectus, Facebook is not ruling out the possibility of breaking into the Chinese market. “We continue to evaluate entering China,” the prospectus promised. But Facebook also admitted that reaching millions of new users in this “large potential market” would be an uphill task. “We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government,” the filing warned.

Experts say Facebook has next to no chance of being allowed to operate freely in China unless it is willing to bow to the country’s censorship rules. “Under the current political structure (it has) probably zero to nil” chance of operating in China again, said Bill Bishop, a Beijing-based internet consultant and investor.

Others question whether entry into the Chinese market is even worth the hassle: “Facebook would be challenged in China anyway. Social network users have quite distinct local tastes, which puts global brands at a disadvantage. The market is overcrowded too,” remarked Reuters’ Breakingviews.

Unlike the US, China lacks a dominant player in the social networking sector. The leading social media firms like Sina, Renren and Tencent, have all thrived, in part by keeping closely to the official rules on content filtering and monitoring. But none individually has a presence as ubiquitous as Facebook’s in the US. Sina’s Weibo site had 227 million user accounts at the end of September, the latest data available. Renren had 137 million active users as of the same period.


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