Facebook takes steps to open sales office in China

Social networking giant, banned from mainland since 2009, plans to expand efforts to sell ads to companies wanting to reach global users

PUBLISHED : Wednesday, 14 May, 2014, 1:20am
UPDATED : Wednesday, 14 May, 2014, 1:20am

Facebook is taking steps to open a sales office in China to work with local advertisers, according to people with knowledge of the matter, in a move that would put the social network's employees in the country for the first time, even as its service remains censored there.

Facebook could open an office in China within a year to serve a growing set of customers in the country.

Facebook is in discussions to lease space in Beijing's Fortune Financial Centre, located in the city's central business district, according to other people familiar with the matter.

I don’t think you are going to see any access for Facebook anytime soon

The company has not decided whether to hire contractors or full-time employees for a sales office, which would require an operating licence.

Opening a China office would mark a significant step for Facebook given the country is one of the last large markets that remains relatively untapped by the company.

While Facebook's social-networking service was banned by the Chinese government in 2009, the company - using an office in Hong Kong - has quietly built up a business in the country selling advertisements to companies that want to reach international users.

"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," Facebook vice-president Vaughan Smith said. He declined to comment on the timing or location of a China office.

China has long been tough to crack for US internet companies. EBay and Yahoo, among others, have made little headway in the market. In 2010, Google said it would not comply with the country's online censorship rules and shuttered its local search page. Twitter is also blocked in the country. LinkedIn recently said it planned to expand its Chinese-language website and would restrict some content to adhere to the country's censorship rules.

"The government is still quite concerned about social instability," said Shaun Rein, the managing director at China Market Research Group in Shanghai. "I don't think you are going to see any access for Facebook anytime soon."

The absence of US social media companies in China has spurred a boom of local web firms. Sina Corp's Weibo, a Chinese service that works like Twitter, has more than 129 million monthly active users and went public in the US last month. Tencent's WeChat, which would compete with WhatsApp, the messaging app that Facebook agreed to acquire for about US$19 billion, has 355 million users.

Facebook said in its prospectus for its 2012 initial public offering that "substantial legal and regulatory complexities" prevented its entry into China, which is home to the world's largest number of web users.

That has not stopped the company from developing other business strands in China. Facebook has focused on supplying advertisements to exporters in the country.

The company is now working to boost sales from Asia, where Facebook made US$354 million, or 14 per cent of revenue, in the first quarter.