Facebook is set to tap the unexplored tech-savvy population of China following the social media company’s recent acquisition of office space in Beijing ahead of its opening up of office in China; a move which in turn will increase the company’s user base.
Theleasing of office space by Facebook Inc. in Beijing marks the company’s formal entry into the country. This comes even as the media giant’s website still remains blocked in China, a situation whose finer details still remain undisclosed.
Facebook’s website was blocked by the Chinese Government back in 2009. This ban was later partially lifted in September 2013 with the government allowing Facebook, Twitter and The New York Times to carry out their business within the boundaries of its newly established Shanghai Free Trade Zone.
China has a history of being extremely wary of offshore-based Social Network Service providers like the US based Facebook, Japanese based mobile instant messaging service Line as well as Twitter, because they are not subject to the country’s strict self-censorship laws.
Companies intending to develop a China business must open offices and host their Chinese services on local servers to conciliate Beijing, which is what Facebook and Line seem to be doing right now, unlike Google Inc. which ironically refused to abide by these Chinese requirements and is now conducting no business in the country.
Two tech companies Facebook and Line hit the headlines earlier this year on reports that each was preparing to enter the Chinese market in spite of its big risks, Facebook being the first to make headlines in May with media reporting that the company was seeking to initiate a sales office in Beijing as its first formal presence in China.
Other media reports followed soon after saying that the Japanese based Line was also preparing to enter into China with its leading mobile instant messaging service that is already popular in Asia. Line is reportedly having 400 million users already.
Facebook entered into a three-year contract with the Chinese authorities in May 2014 by which it had agreed to lease more than 800 square meters of office space in Fortune Financial Center, Beijing.
The social media company’s operations as well as those by Twitter and any other social media company entering the free trade zone will be restricted to a very small area with a population of only 5 million.
This restriction will certainly be a major setback for companies like Facebook as they will not be able to attract new users and advertisers beyond the boundaries of the Free Trade Zone.
The leasing of office space in China by Facebook Inc. is by itself an endeavor to extend the company’s foothold in the Asian market and thereby boost revenues from that region. Sources indicate that Facebook had generated about 14.0% of net revenue equivalent to $354.0 million in the last quarter from Asia alone.
Despite the unpredictable approach of the Chinese authorities toward foreign Internet service providers and social media companies, experts believe that the free trade zone is a positive move that is likely to neutralize the hardline taken by the Chinese government towards the social network operators.