General Manager of Data Center of China Internet (DCCI), Hu Yanping, recently declared through his micro-blog that Facebook would enter Chinese market soon according to sina.com. Early in 2007, Facebook registered the domain name ending with “.cn.” Rumor had came that Facebook would enter Chinese market at that time. In March, 2008, Sir Ka-shing Li, the richest person of East Asian descent in the world, confirmed a $100 million investment in Facebook. Although it published simplified Chinese version of the website three months later, its plan to enter China failed. Is it wise to enter China now? Maybe not.
Although Facebook might be confident to seizure the Chinese market, it might come across more difficulties than it has anticipated. Challenges come from the Chinese government, local competitors, and limitations of SNS website itself.
The founder and CEO Mark Zuckerberg has a Chinese-American girlfriend, which might accounts for his personal interest in China. Facebook now has more than 600 million active users, which covers 71.2% of all the American netizens according to OnlineSchools.org. While American market is close to become saturated, Facebook has to resort to overseas expansion in order to keep its rapid growth. According to China Internet Network Information Centre, the amount of Chinese netizens has reached 457 million by the end of last year. Facebook is magnetized by such a huge market, regardless of any difficulties to come.
Before Facebook succeeds in entering the Chinese market, it has to find a better way to deal with the Chinese government. They might not want to follow Google and give up the Chinese market. They can imitate Flickr’s action, instead, and compromise with the Chinese government. Thus, Facebook has to borrow the censorship methods like what Sina does to its microblog. Insiders said Facebook might have to locate its server in China, and let its Chinese partners control more than one half’s shares, in order to please the Chinese government.
Then, about fierce competition from local SNS websites, like renren.com and kaixin.com. It’s true that renren.com just imitated Facebook. Nowadays, renren.com’s design and functions are more and more similar to Facebook. However, renren.com now has had a large base of loyal users. And since renren.com has imitated all the functions and layout of Facebook, it killed the freshness that Facebook might bring to Chinese netizens. Few Chinese people would feel it’s necessary to register a Facebook account, especially when the Chinese Facebook compromises with the Chinese government and keep the network limited within Chinese mainland, as rumor goes.
Thirdly, it’s fairly hard to maintain Facebook’s value in China. Facebook featured its real name registration, while Chinese netizens strongly tend to refuse such requirement. Without real information of the users, Facebook’s market value will get greatly hurt.
Thus I’m not so confident in Facebook’s entering China, especially when it keeps its functions and business operations as it enters China. But, if it get new blood from its Chinese partners or develop new business value for the Chinese market, it might lead all the SNS website break through their limitations.