Facebook Inc. has set up a subsidiary in Hangzhou, located in China, a nation where the social media giant’s site remains blocked for ten years. As per a filing seen on China’s National Enterprise Credit Information Publicity System by Reuters, the Facebook Chinese subsidiary was approved recently on July 18.
“We are interested in setting up an ‘innovation hub’ in Zhejiang to support Chinese developers, innovators and start-ups,” commented Debbie Frost, a Facebook spokesperson, pointing towards the Chinese province where Hangzhou is situated.
The social media company had made similar efforts in “France, Brazil, India and Korea to focus on training and workshops”, the spokesperson added when inquired about the subject matter. The step echoes CEO Mark Zuckerberg’s words that Facebook is more of a technology-oriented company rather than plain social media site.
In general, Facebook along with other apps like Twitter, Instagram, WhatsApp, Pinterest and Snapchat have remained blocked in the second largest economy of the world, thanks to China’s strict censorship regulations.
Facebook Chinese Subsidiary
Facebook Chinese subsidiary holds registered capital of $30 million, reports New York Times. The filing mentions only one shareholder of the new enterprise which is Facebook’s Hong Kong entity.
In addition, it lists Damian Yeo, Head of the Facebook legal team in the Asia Pacific as the Chairman, and David Kling, Facebook Deputy General Counsel and Corporate Secretary, as a Director, cites Bloomberg.
A company representative clarified that by establishing a company-owned unit in a blocked zone did not reflect that Facebook was modifying its approach towards China. However, the move meant the company was eager to learn what it takes to operate in China.
In contrast, during an interview with Recode a week ago, Zuckerberg indicated that efforts in Beijing had slowed down. “We’re a long way from doing anything [in China].” He reiterated Facebook was developing products for China “over the long term,” but added: “We need to figure out a solution that is in line with our principles and what we want to do, and in line with the laws there, or else it’s not going to happen. Right now, there isn’t an intersection.”
Before this, the Facebook CEO has made several attempts building a healthy relationship with China through frequently meeting top Chinese executives including President Xi Jinping and addressing a Q&A in Mandarin at a Chinese University, four years back.
Despite registration of Facebook Chinese subsidiary now, it seems very difficult for the Silicon Valley enterprise to navigate China so easily. As soon as the news broke, the corporate listing was removed from the Chinese government website by late Tuesday. Moreover, few references to the new unit appeared to be blocked on the platform, reports the Times.
Facebook Disguised Entry into China
In 2017, Facebook quietly paved a way into China by launching a photo and video sharing app titled “Colorful Balloons”. For this, it worked on censorship tool and did not attach its name to the app.
Besides this, Facebook earns huge revenue from China even without any physical presence in the nation before now. The company sells worldwide advertisements to Chinese businesses and the Chinese government. Surprisingly, these ads are so popular that China has been the Facebook’s biggest ad revenue source in Asia, mentions the New York Times.
Other Blocked Tech Giants’ Presence in China
In order to gain access to China, LinkedIn, the professional website, has agreed to comply with Chinese regulations. Apple and Google are investing million dollars to closely work with the Chinese developers.
Though Google services are blocked in the Chinese province, it lately launched its own artificial intelligence (AI) lab there. The search giant has also cautiously introduced quite a few apps for the Chinese market in a recent period, including an AI sketching app.
Meanwhile, last month Google has also made a strategic investment in the Chinese second largest e-commerce house, JD.com.
Updated: China Withdraws Facebook license for constructing an innovation hub, reports The New York Times.
